10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________ 

FORM 10-Q

 __________________________________________

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2014

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                 

Commission File Number 1-2299

___________________________________________ 

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

___________________________________________ 

Ohio	34-0117420
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
One Applied Plaza, Cleveland, Ohio	44115
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (216) 426-4000

(Former name, former address and former fiscal year, if changed since last report)

__________________________________________ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  [X]     No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  [X]  No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[X]	Accelerated filer	[ ]
Non-accelerated filer	[ ]  (Do not check if a smaller reporting company)	Smaller reporting company	[ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

   Yes [ ]    No [X]

There were 41,280,636 (no par value) shares of common stock outstanding on October 15, 2014.

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX

			Page No.
Part I:	FINANCIAL INFORMATION
	Item 1:	Financial Statements
		Condensed Statements of Consolidated Income-Three Months Ended September 30, 2014 and 2013	2
		Condensed Statements of Comprehensive Income-Three Months Ended September 30, 2014 and 2013	3
		Condensed Consolidated Balance Sheets-September 30, 2014 and June 30, 2014	4
		Condensed Statements of Consolidated Cash Flows-Three Months Ended September 30, 2014 and 2013	5
		Notes to Condensed Consolidated Financial Statements	6
		Report of Independent Registered Public Accounting Firm	15
	Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3:	Quantitative and Qualitative Disclosures About Market Risk	22
	Item 4:	Controls and Procedures	23
Part II:	OTHER INFORMATION
	Item 1:	Legal Proceedings	24
	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	24
	Item 5:	Other Information	24
	Item 6:	Exhibits	25
Signatures			26

1

PART I: FINANCIAL INFORMATION

ITEM I: FINANCIAL STATEMENTS

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED INCOME

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended
	September 30,
	2014		2013
Net Sales	$	702,325	$	605,305
Cost of Sales	507,393		435,510
Gross Profit	194,932		169,795
Selling, Distribution and Administrative, including depreciation	148,767		130,256
Operating Income	46,165		39,539
Interest (Income) Expense, net	1,662		61
Other (Income) Expense, net	244		(1,091		)
Income Before Income Taxes	44,259		40,569
Income Tax Expense	15,137		13,725
Net Income	$	29,122	$	26,844
Net Income Per Share - Basic	$	0.70	$	0.64
Net Income Per Share - Diluted	$	0.70	$	0.63
Cash dividends per common share	$	0.25	$	0.23
Weighted average common shares outstanding for basic computation	41,467		42,157
Dilutive effect of potential common shares	362		480
Weighted average common shares outstanding for diluted computation	41,829		42,637

See notes to condensed consolidated financial statements.

2

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended
	September 30,
	2014			2013
Net income per the condensed statements of consolidated income	$	29,122		$	26,844
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(19,105		)	550
Postemployment benefits:
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	72			95
Unrealized gain (loss) on investment securities available for sale	(41		)	34
Total of other comprehensive income (loss), before tax	(19,074		)	679
Income tax expense related to items of other comprehensive income	14			48
Other comprehensive income (loss), net of tax	(19,088		)	631
Comprehensive income, net of tax	$	10,034		$	27,475

See notes to condensed consolidated financial statements.

3

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

	September 30, 2014			June 30, 2014
ASSETS
Current assets
Cash and cash equivalents	$	52,033		$	71,189
Accounts receivable, less allowances of $10,513 and $10,385	403,521			375,732
Inventories	367,291			335,747
Other current assets	51,915			53,480
Total current assets	874,760			836,148
Property, less accumulated depreciation of $160,063 and $156,872	106,683			103,596
Identifiable Intangibles, net	208,497			159,508
Goodwill	259,156			193,494
Deferred tax assets	260			21,166
Other assets	19,563			20,257
TOTAL ASSETS	$	1,468,919		$	1,334,169
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	145,614		$	172,401
Current portion of long term debt	2,842			2,720
Compensation and related benefits	47,687			55,760
Other current liabilities	75,839			60,074
Total current liabilities	271,982			290,955
Long-term debt	321,418			167,992
Postemployment benefits	19,073			23,611
Other liabilities	65,741			51,303
TOTAL LIABILITIES	678,214			533,861
Shareholders’ Equity
Preferred stock—no par value; 2,500 shares authorized; none issued or outstanding	—			—
Common stock—no par value; 80,000 shares authorized; 54,213 shares issued	10,000			10,000
Additional paid-in capital	158,001			156,999
Retained Earnings	915,482			896,776
Treasury shares—at cost (12,825 and 12,650 shares)	(272,075		)	(261,852		)
Accumulated other comprehensive income (loss)	(20,703		)	(1,615		)
TOTAL SHAREHOLDERS’ EQUITY	790,705			800,308
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,468,919		$	1,334,169

See notes to condensed consolidated financial statements.

4

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended
	September 30,
	2014			2013
Cash Flows from Operating Activities
Net income	$	29,122		$	26,844
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property	4,211			3,431
Amortization of intangibles	6,491			3,249
Unrealized foreign exchange transactions (gain) loss	(572		)	(291		)
Amortization of stock options and appreciation rights	577			636
(Gain) loss on sale of property	(5		)	35
Other share-based compensation expense	592			754
Changes in operating assets and liabilities, net of acquisitions	(58,891		)	(18,014		)
Other, net	374			312
Net Cash (used in) provided by Operating Activities	(18,101		)	16,956
Cash Flows from Investing Activities
Property purchases	(3,100		)	(1,571		)
Proceeds from property sales	3			183
Acquisition of businesses, net of cash acquired	(129,810		)	—
Net Cash used in Investing Activities	(132,907		)	(1,388		)
Cash Flows from Financing Activities
Borrowings under revolving credit facility	34,000			—
Long-term debt borrowings	120,238			—
Long-term debt repayments	(690		)	—
Purchases of treasury shares	(10,400		)	(3,001		)
Dividends paid	(10,402		)	(9,746		)
Excess tax benefits from share-based compensation	556			1,516
Acquisition holdback payments	—			(606		)
Net Cash provided by (used in) Financing Activities	133,302			(11,837		)
Effect of Exchange Rate Changes on Cash	(1,450		)	(18		)
(Decrease) Increase in Cash and Cash Equivalents	(19,156		)	3,713
Cash and Cash Equivalents at Beginning of Period	71,189			73,164
Cash and Cash Equivalents at End of Period	$	52,033		$	76,877

See notes to condensed consolidated financial statements.

5

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

1.    BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position of Applied Industrial Technologies, Inc. (the “Company”, or “Applied”) as of September 30, 2014, and the results of its operations and its cash flows for the three month periods ended September 30, 2014 and 2013, have been included. The condensed consolidated balance sheet as of June 30, 2014 has been derived from the audited consolidated financial statements at that date. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2014.

Operating results for the three month period ended September 30, 2014 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending June 30, 2015.

Change in Accounting Principle - U.S. Inventory Costing Methodology

Over the past eight quarters, the Company has been implementing SAP as its new Enterprise Resource Planning system (ERP) at its U.S. service centers. As implementation occurred at each service center, the method used to apply the link chain dollar value last-in first-out (LIFO) method of accounting changed for the inventories at that location. The new inventory costing methodology utilizes the weighted average cost method to determine the current year LIFO indices as well as any new LIFO layers established, whereas previously, current costs were used. Upon completion of the implementation, on July 1, 2014 the Company changed its accounting policy to the new method. Differences between amounts recognized in the financial statements during the implementation period and the previous accounting policy prior to July 1, 2014 were immaterial.

The Company believes that this change in accounting principle is preferable under the circumstances because weighted average cost will provide a better reflection of actual transactions and inventory purchases resulting in improved matching of actual costs and current revenues, will result in greater consistency in inventory costing across the organization as certain other U.S. locations were previously using weighted average cost for similar LIFO calculations in their legacy inventory systems, and the new ERP system will make inventory costing a more efficient process within the U.S. ASC 250, Accounting Changes and Error Corrections, requires that unless it is impracticable to do so, the voluntary adoption of a new accounting principle should be done retrospectively to all prior periods. Before July 1, 2014, the Company’s former ERP system did not capture weighted average costs within the U.S. and the data needed to recalculate previous LIFO indices does not exist. Thus, the Company has concluded it is impracticable to recognize a cumulative effect or to retrospectively apply the effect of this change in accounting principle prior to July 1, 2014, but believes that those effects would be immaterial in all periods.

Change in Accounting Principle - Alignment of Canadian Subsidiary Reporting

Effective July 1, 2013, the Company aligned the consolidation of the Company’s Canadian subsidiary in the consolidated financial statements which previously included results on a one month reporting lag. The Company believes that this change in accounting principle is preferable as it provides contemporaneous reporting within our consolidated financial statements. In accordance with applicable accounting literature, the elimination of a one month reporting lag of a subsidiary is treated as a change in accounting principle and requires retrospective application. The Company has determined that the effect of this change is not material to the financial statements for all periods presented and therefore, the Company has not presented retrospective application of this change. The net impact of the lag elimination of $1,200 of income for the month of June 2013 has been included within “Other (Income) Expense, net” on the Statement of Consolidated Income for the first quarter of fiscal 2014. The three months ended September 30, 2013 reflect the same results, had the financial statements been retrospectively adjusted, with the exception of net income which would have decreased $1,200.

6

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

Inventory

The Company uses the last-in, first-out (LIFO) method of valuing U.S. inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination.

New Accounting Pronouncements

In May 2014, the FASB issued its final standard on the recognition of revenue from contracts with customers. The standard, issued as Accounting Standards Update (ASU) 2014-09, outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of this model is that "an entity recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services." The update is effective for financial statement periods beginning after December 15, 2016, with early adoption prohibited. The Company is currently determining the impact of this pronouncement on its financial statements and related disclosures.

In June 2014, the FASB issued its final standard on accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard, issued as (ASU) 2014-12, clarifies that a performance target that affects vesting and that can be achieved after the requisite service period, should be treated as a performance condition. The update is effective for financial statement periods beginning after December 15, 2015, with early adoption permitted. The Company is currently determining the impact of this pronouncement on its financial statements and related disclosures.

2. BUSINESS COMBINATIONS

The operating results of all acquired entities are included within the consolidated operating results of the Company from the date of each respective acquisition.

Fiscal 2015

On July 1, 2014, the Company acquired 100% of the outstanding stock of Knox Oil Field Supply Inc. (“Knox”), headquartered in San Angelo, Texas, for total consideration of $132,000, including cash paid of $118,000 at closing. The primary reason for the acquisition of Knox is to complement and expand the Company’s capabilities to serve the upstream oil and gas industry in the United States. As a distributor of oilfield supplies and related services, this business will be included in the Service Center Based Distribution Segment. The Company funded the acquisition by drawing $120,000 from the previously uncommitted shelf facility with Prudential Investment Management at a fixed interest rate of 3.19% with an average seven year life. The remaining $14,000 purchase price will be paid as acquisition holdback payments on the first three anniversaries of the acquisition with interest at a fixed rate of 1.5%.

7

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

The following table summarizes the consideration transferred, assets acquired, and liabilities assumed in connection with the acquisition of Knox based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment:

	Knox Acquisition
Accounts receivable	$	20,100
Inventories	18,900
Property	3,600
Identifiable intangible assets	58,500
Goodwill	70,500
Total assets acquired	171,600
Accounts payable and accrued liabilities	10,300
Deferred income taxes	29,300
Net assets acquired	$	132,000
Purchase price	132,800
Reconciliation of fair value transferred:
Working Capital Adjustments	(800		)
Total Consideration	$	132,000

None of the goodwill acquired is expected to be deductible for income tax purposes. The goodwill recognized is attributable primarily to expected synergies and other benefits that the Company believes will result from the acquisition of Knox.

Also on July 1, 2014, the Company acquired substantially all of the net assets of Rodamientos y Derivados del Norte S.A. de C.V., a Mexican distributor of bearings and power transmission products and related products, and Great Southern Bearings / Northam Bearings, a Western Australia distributor of bearings and power transmission products for combined consideration of approximately $12,600. Tangible assets acquired was $10,400 and intangibles including goodwill was $2,200, based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment. The Company funded these acquisitions from borrowings under the revolving credit facility. Total acquisition holdback payments of $1,600 will be paid in equal increments on the following three anniversaries of the acquisition. The results of operations for the Mexican and Australian acquisitions are not material for any period presented.

Fiscal 2014

On May 1, 2014, the Company acquired 100% of the outstanding stock of Reliance Industrial Products (“Reliance”), headquartered in Nisku, Alberta, Canada, with operations in Western Canada and the Western United States, for total consideration in the amount of $179,800; tangible assets acquired was $27,500 and intangibles including goodwill was $152,300, based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment. The primary reason for the acquisition is to provide the Company enhanced capabilities to serve the upstream oil and gas industry in the United States and Canada. A distributor of fluid conveyance and oilfield supplies, this business is included in the Service Center Based Distribution Segment. The Company funded the acquisition by using available cash in Canada in the amount of $31,900, existing revolving credit facilities of $36,600 and a new $100,000 five year term loan facility, with the remainder of $20,000 to be paid in equal amounts as acquisition holdback payments on the first two anniversaries of the acquisition, plus interest at 2% per annum.

During December 2013, the Company acquired substantially all of the net assets of Texas Oilpatch Services Corporation (Tops), a Texas distributor of bearings, oil seals, power transmission products, and related replacement parts to the oilfield industry. The acquired business is included in the Service Center Based Distribution segment. The consideration paid for this acquisition was $17,000, tangible assets acquired was $3,900 and intangibles, including goodwill was $13,100. The purchase price includes $2,550 of acquisition holdback payments which have been paid into an escrow account controlled by a third party. The acquisition price and the results of operations of Tops are not material in relation to the Company’s consolidated financial statements.

8

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

Pro Forma Financial Information

The following unaudited pro forma consolidated results of operations have been prepared as if the Reliance and Knox acquisitions (including the related acquisition costs) had occurred at the beginning of the first quarter of fiscal 2014:

Pro forma, three months ended September 30:	2013
Sales	$	663,010
Operating income	$	44,746
Net income	$	29,089
Diluted net income per share	$	0.68

These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect additional depreciation and amortization assuming the fair value adjustments to property, plant, and equipment, and amortizable intangible assets had been applied as of July 1, 2013. In addition, pro forma adjustments have been made for the interest expense that would have been incurred as a result of the indebtedness used to finance the acquisitions. The pro forma net income amounts also incorporate an adjustment to the recorded income tax expense for the income tax effect of the pro forma adjustments described above. These pro forma results of operations do not include any anticipated synergies or other effects of the planned integrations; accordingly, such pro forma adjustments do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred as the date indicated or that may result in the future.

3.    GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Fluid Power Businesses segment for the three month period ended September 30, 2014 are as follows:

	Service Centers			Fluid Power		Total
Balance at July 1, 2014	$	192,565		$	929	$	193,494
Goodwill acquired during the period	71,361			—		71,361
Other, primarily currency translation	(5,699		)	—		(5,699		)
Balance at September 30, 2014	$	258,227		$	929	$	259,156

At September 30, 2014, accumulated goodwill impairment losses, subsequent to fiscal year 2002, totaled $36,605 and related to the Fluid Power Businesses segment.

9

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

The Company’s identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:

September 30, 2014	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	217,668	$	52,751	$	164,917
Trade names	43,316		11,153		32,163
Vendor relationships	15,144		6,793		8,351
Non-competition agreements	4,528		1,462		3,066
Total Identifiable Intangibles	$	280,656	$	72,159	$	208,497

June 30, 2014	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	170,395	$	48,285	$	122,110
Trade names	36,912		10,394		26,518
Vendor relationships	15,446		6,628		8,818
Non-competition agreements	3,322		1,260		2,062
Total Identifiable Intangibles	$	226,075	$	66,567	$	159,508

Amounts include the impact of foreign currency translation. Fully amortized amounts are written off.

During the three month period ended September 30, 2014, the Company acquired identifiable intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:

	Acquisition Cost Allocation		Weighted-Average Life
Customer relationships	$	51,494	20
Trade names	6,928		5
Vendor relationships	9		5
Non-competition agreements	1,300		5
Total Intangibles Acquired	$	59,731	18

Estimated future amortization expense by fiscal year (based on the Company’s identifiable intangible assets as of September 30, 2014) for the next five years is as follows: $19,800 for the remainder of 2015, $24,500 for 2016, $23,100 for 2017, $21,000 for 2018, $19,200 for 2019 and $16,300 for 2020.

4.     DEBT

Revolving Credit Facility

The Company has a revolving credit facility with a group of banks expiring in May 2017. This agreement provides for unsecured borrowings of up to $150,000. Fees on this facility range from 0.09% to 0.175% per year based upon the Company's leverage ratio at each quarter end. Borrowings under this agreement carry variable interest rates tied to either LIBOR, prime, or the bank’s cost of funds at the Company’s discretion. This agreement also enables the Company to refinance this debt on a long-term basis. At September 30, 2014 and June 30, 2014, the Company had $103,000 and $69,000 outstanding under this credit facility, respectively. Unused lines under this facility, net of outstanding letters of credit of $8,900 and $8,700 to secure certain insurance obligations, totaled $38,100 and $72,300 at September 30, 2014 and June 30, 2014, respectively and are available to fund future acquisitions or other capital and operating requirements. The weighted average interest rate on the revolving credit facility outstanding as of September 30, 2014 and June 30, 2014 was 0.85%.

10

APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

Long-Term Borrowings

The Company entered into a $100,000 unsecured five-year term loan with a group of banks in April2014, with a final maturity date in April2019. Borrowings under this agreement carry a variable interest rate tied to LIBOR, which at September 30, 2014 and June 30, 2014 was a rate of 1.06%. The term loan had $98,800 and $99,400 outstanding at September 30, 2014 and June 30, 2014, respectively.

In April 2014 the Company assumed $2,400 of debt as a part of the headquarters facility acquisition. The 1.5% fixed interest rate note is held by the State of Ohio Development Services Agency, maturing in May 2024. At September 30, 2014 and June 30, 2014, $2,300 was outstanding.

At September 30, 2014, the Company had borrowings outstanding under its uncommitted unsecured shelf facility agreement with Prudential Investment Management of $120,000. These "Series C" borrowings carry a fixed interest rate of 3.19%, which is due in equal principal payments in July of 2020, 2021 and 2022. As of September 30, 2014, $5,000 in additional financing was available under this facility.

5.    FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at September 30, 2014 and June 30, 2014 totaled $10,957 and $11,011, respectively. These marketable securities are held in a rabbi trust for a non-qualified deferred compensation plan. The marketable securities are included in Other Assets on the accompanying condensed consolidated balance sheets and their fair values are based upon quoted market prices in an active market (Level 1 in the fair value hierarchy).

The fair value of the uncommitted shelf facility agreement with Prudential Investment Management is $120,000 at September 30, 2014. (Level 2 in the fair value hierarchy)

The revolving credit facility and the term loan contain variable interest rates and their carrying values approximate fair value (Level 2 in the fair value hierarchy).

6.    SHAREHOLDERS' EQUITY

Accumulated Other Comprehensive Income (Loss)

Changes in the accumulated other comprehensive income (loss), are comprised of the following:

	Three Months Ended September 30, 2014
	Foreign currency translation adjustment			Unrealized gain (loss) on securities available for sale			Postemployment benefits			Total Accumulated other comprehensive income (loss)
Balance at July 1, 2014	$	989		$	21		$	(2,625	)	$	(1,615	)
Other comprehensive income (loss)	(19,105		)	(27		)				(19,132		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			44			44
Net current-period other comprehensive income (loss), net of taxes	(19,105		)	(27		)	44			(19,088		)
Balance at September 30, 2014	$	(18,116	)	$	(6	)	$	(2,581	)	$	(20,703	)

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

Other Comprehensive Income (Loss)

Details of other comprehensive income (loss) are as follows:

	Three Months Ended September 30,
	2014									2013
	Pre-Tax Amount			Tax Expense (Benefit)			Net Amount			Pre-Tax Amount		Tax Expense (Benefit)		Net Amount
Foreign currency translation adjustments	$	(19,105	)				$	(19,105	)	$	550	$	—	$	550
Postemployment benefits:
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	72			28			44			95		37		58
Unrealized gain (loss) on investment securities available for sale	(41		)	(14		)	(27		)	34		11		23
Other comprehensive income (loss)	$	(19,074	)	$	14		$	(19,088	)	$	679	$	48	$	631

Antidilutive Common Stock Equivalents

In the three month periods ended September 30, 2014 and 2013, respectively, stock options and stock appreciation rights related to 239 and 272 shares of common stock, were not included in the computation of diluted earnings per share for the periods then ended as they were anti-dilutive.

7.    BENEFIT PLANS

The following table provides summary disclosures of the net periodic postemployment costs recognized for the Company’s postemployment benefit plans:

	Pension Benefits						Retiree Health Care Benefits
Three Months Ended September 30,	2014			2013			2014			2013
Components of net periodic cost:
Service cost	$	24		$	19		$	13		$	12
Interest cost	224			295			24			35
Expected return on plan assets	(124		)	(104		)	—			—
Recognized net actuarial (gain) loss	140			153			(22		)	(9		)
Amortization of prior service cost	22			20			(68		)	(68		)
Net periodic cost	$	286		$	383		$	(53	)	$	(30	)

The Company contributed $5,832 to its pension benefit plans and $40 to its retiree health care plans in the three months ended September 30, 2014. Expected contributions for the remainder of fiscal 2015 are $570 for the pension benefit plans to fund scheduled retirement payments and $120 for retiree health care plans.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

8.    SEGMENT AND GEOGRAPHIC INFORMATION

The accounting policies of the Company’s reportable segments are generally the same as those used to prepare the condensed consolidated financial statements. Intercompany sales primarily from the Fluid Power Businesses segment to the Service Center Based Distribution segment of $5,573 and $5,533, in the three months ended September 30, 2014 and 2013, respectively, have been eliminated in the Segment Financial Information tables below.

Three Months Ended	Service Center Based Distribution		Fluid Power Businesses		Total
September 30, 2014
Net sales	$	575,097	$	127,228	$	702,325
Operating income for reportable segments	37,535		12,933		50,468
Assets used in business	1,251,565		217,354		1,468,919
Depreciation and amortization of property	3,843		368		4,211
Capital expenditures	2,738		362		3,100
September 30, 2013
Net sales	$	492,072	$	113,233	$	605,305
Operating income for reportable segments	28,372		9,457		37,829
Assets used in business	841,770		208,319		1,050,089
Depreciation and amortization of property	2,999		432		3,431
Capital expenditures	1,394		177		1,571

Enterprise Resource Planning system (ERP) related assets are included in assets used in business and capital expenditures within the Service Center Based Distribution segment.

A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:

	Three Months Ended
	September 30,
	2014			2013
Operating income for reportable segments	$	50,468		$	37,829
Adjustment for:
Intangible amortization—Service Center Based Distribution	4,867			1,495
Intangible amortization—Fluid Power Businesses	1,624			1,754
Corporate and other (income) expense, net	(2,188		)	(4,959		)
Total operating income	46,165			39,539
Interest expense, net	1,662			61
Other (income) expense, net	244			(1,091		)
Income before income taxes	$	44,259		$	40,569

The change in corporate and other (income) expense, net is due to changes in the amounts and levels of expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support and other items.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts) (Unaudited)

Net sales are presented in geographic areas based on the location of the facility shipping the product and are as follows:

	Three Months Ended
	September 30,
	2014		2013
Geographic Areas:
United States	$	561,559	$	501,051
Canada	99,181		69,747
Other countries	41,585		34,507
Total	$	702,325	$	605,305

Other countries consist of Mexico, Australia and New Zealand.

9.    OTHER (INCOME) EXPENSE , NET

Other (income) expense, net consists of the following:

	Three Months Ended
	September 30,
	2014		2013
Unrealized (gain) loss on assets held in rabbi trust for a nonqualified deferred compensation plan	$	91	$	(596	)
Elimination of one-month Canadian reporting lag, effective July 1, 2013	—		(1,167		)
Foreign currency transactions (gain) loss	54		605
Other, net	99		67
Total other (income) expense, net	$	244	$	(1,091	)

10.    SUBSEQUENT EVENTS

We have evaluated subsequent events and transactions subsequent to September 30, 2014, through the date the financial statements were issued.

On November 3, 2014, the Company acquired substantially all of the net assets of Ira Pump and Supply Inc. (Ira Pump), headquartered in Ira, Texas. The acquisition of Ira Pump further expands the Company's capabilities to serve the upstream oil and gas industry in the United States. As a distributor of oilfield pumps and supplies, this business will be included in the Service Center Based Distribution Segment. The financial results of the operations acquired will be included in the Company's results of operations from November 3, 2014.

On October 30, 2014, the Company amended and increased its unsecured shelf facility with Prudential Investment Management to provide an available borrowing capacity of $100,000. The Company borrowed $50,000 to fund the acquisition as well as working capital needs. These "Series D" borrowings carry a fixed interest rate of 3.21%, with equal principal payments due in October of 2019 and 2023, leaving a remaining borrowing capacity on the unsecured shelf facility of $50,000.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The accompanying condensed consolidated financial statements of the Company have been reviewed by the Company’s independent registered public accounting firm, Deloitte & Touche LLP, whose report covering their reviews of the condensed consolidated financial statements follows.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Applied Industrial Technologies, Inc.

Cleveland, Ohio

We have reviewed the accompanying condensed consolidated balance sheet of Applied Industrial Technologies, Inc. and subsidiaries (the “Company”) as of September 30, 2014, and the related condensed statements of consolidated income, consolidated comprehensive income, and consolidated cash flows for the three-month periods ended September 30, 2014 and 2013. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States).  A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of June 30, 2014, and the related statements of consolidated income, comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated August 22, 2014, we expressed an unqualified opinion on those consolidated financial statements.  In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of June 30, 2014 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP         

Cleveland, Ohio

November 4, 2014

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

With more than 5,800 employees across North America, Australia and New Zealand, Applied Industrial Technologies (“Applied,” the “Company,” “We,” “Us” or “Our”) is a leading industrial distributor serving MRO (Maintenance, Repair & Operations) and OEM (Original Equipment Manufacturer) customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers maintenance training and inventory management solutions that provide added value to our customers. We have a long tradition of growth dating back to 1923, the year our business was founded in Cleveland, Ohio. During the first quarter of fiscal 2015, business was conducted in the United States, Canada, Mexico, Puerto Rico, Australia and New Zealand from 565 facilities.

The following is Management's Discussion and Analysis of significant factors which have affected our financial condition, results of operations and cash flows during the periods included in the accompanying condensed statements of consolidated income, consolidated comprehensive income and consolidated cash flows.When reviewing the discussion and analysis set forth below, please note that the majority of SKUs (Stock Keeping Units) we sell in any given period were not necessarily sold in the comparable period of the prior year, resulting in the inability to quantify certain commonly used comparative metrics analyzing sales, such as changes in product mix and volume.

Overview

Consolidated sales for the quarter ended September 30, 2014increased $97.0 million or 16.0% compared to the prior year quarter, with acquisitions contributing $80.5 million or 13.3% and a unfavorable foreign currency translation of $3.3 milliondecreasing sales by 0.5%. Operating margin remained relatively stable at 6.6% of sales from 6.5% for the prior year quarter. Net income of $29.1 millionincreased8.5% compared to the prior year quarter. Shareholders' equity was $790.7 million at September 30, 2014, down from the June 30, 2014 level of $800.3 million. The current ratio was 3.2 to 1 at September 30, 2014 and 2.9 to 1 at June 30, 2014.

Applied monitors several economic indices that have been key indicators for industrial economic activity in the United States. These include the Industrial Production and Manufacturing Capacity Utilization (MCU) indices published by the Federal Reserve Board and the Purchasing Managers Index (PMI) published by the Institute for Supply Management (ISM). Historically, our performance correlates well with the MCU, which measures productivity and calculates a ratio of actual manufacturing output versus potential full capacity output. When manufacturing plants are running at a high rate of capacity, they tend to wear out machinery and require replacement parts.

In the current September quarter, Industrial Production increased at an annual rate of 3.2%. The MCU for September 2014 was 77.3, up slightly from the June 2014 revised reading of 77.2. The ISM PMI registered 56.6 in September, an increase from 55.3 in June, and well above 50 (its expansionary threshold).

The number of Company employees was 5,831 at September 30, 2014, 5,472 at June 30, 2014, and 5,132 at September 30, 2013. The number of operating facilities totaled 565 at September 30, 2014, 538 at June 30, 2014 and 521 at September 30, 2013.

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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations

Three months Ended September 30, 2014 and 2013

The following table is included to aid in review of Applied's condensed statements of consolidated income.

	Three Months Ended September 30,				Change in $'s Versus Prior Period - % Increase
	As a Percent of Net Sales
	2014		2013
Net Sales	100.0	%	100.0	%	16.0	%
Gross Profit	27.8	%	28.1	%	14.8	%
Selling, Distribution & Administrative	21.2	%	21.5	%	14.2	%
Operating Income	6.6	%	6.5	%	16.8	%
Net Income	4.1	%	4.4	%	8.5	%

During the quarter ended September 30, 2014, sales increased$97.0 million or 16.0% compared to the prior year quarter, with acquisitions accounting for $80.5 million or 13.3%, and an unfavorable foreign currency translation decreasing sales by $3.3 million or 0.5%. Sales from businesses not acquired in the current year were up $19.8 million or 3.2% during the quarter with 64 selling days in both quarters ended September 30, 2014 and September 30, 2013.

Sales from our Service Center Based Distribution segment, which operates primarily in MRO markets, increased$83.0 million or 16.9% during the quarter from the same period in the prior year. Growth in sales related to businesses not acquired in the current year increased $4.8 million or 0.9%, acquisitions within this segment increased sales by $80.5 million or 16.4%, while unfavorable foreign currency translation decreased sales by $2.3 million or 0.5%.

Sales from our Fluid Power Businesses segment, which operates primarily in OEM markets, increased$14.0 million or 12.4% during the quarter from the same period in the prior year, primarily attributed to strong sales growth at several of our Fluid Power Businesses, net of the impact of unfavorable foreign currency translation which decreased sales by $1.0 million or 0.9%.

Sales in our U.S. operations were up$60.5 million or 12.1%, with acquisitions adding $46.8 million or 9.3%. Sales from our Canadian operations increased$29.4 million or 42.2%, with acquisitions adding $29.8 million or 42.7% with an unfavorable foreign currency translation decreasing Canadian sales by $3.3 million or 4.7%. Consolidated sales from our other country operations, which include Mexico, Australia and New Zealand, were $7.1 million or 20.5% above the prior year, with acquisitions adding $3.9 million or 11.38% and a negligible impact of foreign currency translation.

During the quarter ended September 30, 2014, industrial products and fluid power products accounted for 72.8% and 27.2%, respectively, of sales as compared to 70.5% and 29.5%, respectively, for the same period in the prior year.

Our gross profit margin for the quarter was 27.8% compared to the prior year's quarter of 28.1%. The decrease in gross profit margin is the result of the timing of volume based supplier support and increased scrap and obsolescence expense in the quarter. The declines were partially offset by higher margins generated from recent acquisitions.

Selling, distribution and administrative expense (SD&A) consists of associate compensation, benefits and other expenses associated with selling, purchasing, warehousing, supply chain management and providing marketing and distribution of the Company's products, as well as costs associated with a variety of administrative functions such as human resources, information technology, treasury, accounting, legal, and facility related expenses. SD&A was 21.2% of sales in the quarter ended September 30, 2014 compared to 21.5% in the prior year quarter, declining slightly. On an absolute basis, SD&A increased$18.5 million or 14.2% compared to the prior year quarter, entirely the result of additional SD&A from businesses acquired in the current year which added $19.1 million of SD&A expenses including $3.6 million associated with intangibles amortization.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Operating income increased$6.6 million or 16.8%, and as a percent of sales increased slightly to 6.6% from 6.5% during the prior year quarter, remaining relatively stable.

Operating income as a percentage of sales for the Service Center Based Distribution segment increased to 6.5% in the current year quarter from 5.8% in the prior year quarter. This increase is primarily attributable to an increase in gross profit as a percentage of sales, representing an increase of 1.4%, offset by an increase in SD&A as a percentage of sales, representing a decrease of 0.7%.

Operating income as a percentage of sales for the Fluid Power Business segment increased to 10.2% in the current year quarter from 8.4% in the prior year quarter. This increase is primarily attributable to decreases in SD&A as a percentage of sales, representing an increase of 2.6%, offset by a decrease in gross profits as a percentage of sales, representing a decrease of 0.8%.

Interest expense has increased to $1.6 million in the current year, entirely due to acquisition related borrowing.

Other expense was $0.2 million in the quarter which included unrealized losses on investments held by non-qualified deferred compensation trusts of $0.1 million as well as $0.1 million of expense from other items. During the prior year quarter, other income was $1.1 million which included unrealized gains on investments held by non-qualified deferred compensation trusts of $0.6 million, as well as $1.2 million in income from the elimination of the one-month Canadian reporting lag, offset by net unfavorable foreign currency transaction losses of $0.6 million.

The effective income tax rate was 34.2% for the quarter ended September 30, 2014 compared to 33.8% for the quarter ended September 30, 2013. The impact of miscellaneous discrete benefits which were recorded in the prior year and did not repeat in the current year resulted in an increase of 0.4% from the U.S. federal statutory tax rate. We expect our full year tax rate for fiscal 2015 to be in the 34.0% to 34.5% range.

As a result of the factors addressed above, net income increased$2.3 million or 8.5% compared to the prior year quarter. Net income per share was $0.70 per share for the quarter ended September 30, 2014, compared to $0.63 in the prior year quarter, an increase of 11.1%. Net income per share was favorably impacted due to lower weighted average common shares outstanding as a result of our share repurchases program.

Liquidity and Capital Resources

Our primary source of capital is cash flow from operations, supplemented as necessary by bank borrowings or other sources of debt. At September 30, 2014, we had $324.3 million in outstanding borrowings. At September 30, 2013, we had no outstanding borrowings. Management expects that our existing cash, cash equivalents, funds available under the revolving credit facility, cash provided from operations, and the use of operating leases will be sufficient to finance normal working capital needs, payment of dividends, acquisitions, investments in properties, facilities and equipment, and the purchase of additional Company common stock. Management also believes that additional long-term debt and line of credit financing could be obtained based on the Company's credit standing and financial strength.

The Company holds, from time to time, relatively significant cash and cash equivalent balances in tax jurisdictions outside of the United States. The following table shows the Company's total cash as of September 30, 2014 by tax jurisdiction.

Country	Amount
United States	$	13,070
Canada	33,567
Other countries	5,396
Total	$	52,033

To the extent cash in foreign countries is distributed to the U.S., it could become subject to U.S. income taxes. Foreign tax credits may be available to offset all or a portion of such taxes. At September 30, 2014, all foreign earnings are considered permanently reinvested.

The Company's working capital at September 30, 2014 was $602.8 million, compared to $545.2 million at June 30, 2014. The current ratio was 3.2 to 1 at September 30, 2014 and 2.9 to 1 at June 30, 2014.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Net Cash Flows

The following table is included to aid in review of Applied's condensed statements of consolidated cash flows; all amounts are in thousands.

	Three Months Ended September 30,
Net Cash Provided by (Used in):	2014			2013
Operating Activities	$	(18,101	)	$	16,956
Investing Activities	(132,907		)	(1,388		)
Financing Activities	133,302			(11,837		)
Exchange Rate Effect	(1,450		)	(18		)
Decrease in Cash and Cash Equivalents	$	(19,156	)	$	3,713

Net cash used in operating activities was $18.1 million for the three months ended September 30, 2014 as compared to $17.0 million provided by operating activities in the prior period. The increase in cash used is due primarily to increased working capital needs. Our expectation is that the $58.9 million of cash used for working capital needs will decline throughout the year due to improved receivables collections, improved inventory turns and extension of payables. Overall, cash from operating activities is expected to improve throughout fiscal 2015.

Net cash used in investing activities during the three months ended September 30, 2014 increased to $132.9 million during the current period versus $1.4 million in the prior period. The increase in cash used for investing activities is due to several acquisitions in the current period, which used $129.8 million, while there were none in the prior year period.

Net cash provided by financing activities increased to $133.3 million for the three months ended September 30, 2014 versus $11.8 million used in financing activities in the prior period. Several factors contributed to the increase in cash provided by financing activities, the most significant of which are $154.2 million in borrowings, partially offset by cash used for the purchase of treasury shares in the amount of $10.4 million and dividends paid in the amount of $10.4 million. In the prior period, there were no borrowings, and less cash was utilized for the purchase of treasury shares and dividends.

ERP Project

In fiscal 2011 Applied commenced its ERP (SAP) project to transform the Company's technology platforms and enhance its business information and technology systems for future growth. We have deployed our solution in our Western Canadian operating locations and our U.S. operating locations selected for transformation. During fiscal 2015, the Company will evaluate and determine a deployment schedule for our remaining Eastern Canadian operating locations, as well as refine our current business and system processes. The Company is continuing to work on the transformation of its financial and accounting systems including fixed assets, general ledger and consolidation systems and expects to complete these enhancements in fiscal 2015.

Share Repurchases

The Board of Directors has authorized the repurchase of shares of the Company's common stock. These purchases may be made in open market and negotiated transactions, from time to time, depending upon market conditions. We acquired 214,000 shares of treasury stock on the open market in the three months ended September 30, 2014 for $10.4 million. At September 30, 2014, we had authorization to repurchase an additional 167,600 shares. During the three months ended September 30, 2013, we acquired 60,700 shares of treasury stock on the open market for $3.0 million. Subsequent to the end of the first quarter, on October 27, 2014, the Board of Directors authorized the repurchase of up to an additional 1.5 million shares of the Company's common stock, which can be purchased in the open market and negotiated transactions.

Borrowing Arrangements

The Company has a revolving credit facility with a group of banks expiring in May 2017. This agreement provides for unsecured borrowings of up to $150.0 million. At September 30, 2014 and June 30, 2014, the Company had $103.0 million and $69.0 million outstanding under this credit facility, respectively. Unused lines under this facility, net of outstanding letters of credit of $8.9 million and $8.7 million to secure certain insurance obligations, totaled $38.1 million and $72.3 million at September 30, 2014 and June 30, 2014, respectively, and are available to fund future acquisitions or other capital and operating requirements.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The Company entered into a $100.0 million unsecured five-year term loan with a group of banks in April2014, with a final maturity date in April2019. Borrowings under this agreement carry a variable interest rate tied to LIBOR, which at September 30, 2014 and June 30, 2014 was a rate of 1.06%. The term loan had $98.8 million and $99.4 million outstanding at September 30, 2014 and June 30, 2014, respectively.

In April 2014 the Company assumed $2.4 million of debt as a part of the headquarters facility acquisition. The 1.5% fixed interest rate note is held by the State of Ohio Development Services Agency, maturing in May 2024. At September 30, 2014 and June 30, 2014 $2.3 million was outstanding.

At September 30, 2014, the Company had borrowings outstanding under its uncommitted unsecured shelf facility agreement with Prudential Investment Management of $120.0 million. These "Series C" borrowings carry a fixed interest rate of 3.19%, which is due in equal principal payments in July of 2020, 2021 and 2022. As of September 30, 2014, $5.0 million in additional financing was available under this facility.

Accounts Receivable Analysis

The following table is included to aid in analysis of accounts receivable and the associated provision for losses on accounts receivable:

	September 30,			June 30,
	2014			2014
Accounts receivable, gross	$	414,034		$	386,117
Allowance for doubtful accounts	10,513			10,385
Accounts receivable, net	$	403,521		$	375,732
Allowance for doubtful accounts, % of gross receivables	2.5		%	2.7		%
	Three Months Ended September 30,
	2014			2013
Provision for losses on accounts receivable	$	416		$	112
Provision as a % of net sales	0.06		%	0.02		%

Accounts receivable are reported at net realizable value and consist of trade receivables from customers. Management monitors accounts receivable by reviewing Days Sales Outstanding (DSO) and the aging of receivables for each of the Company's locations.

On a consolidated basis, DSO was 51.7 at September 30, 2014 versus 51.4 at June 30, 2014. Accounts receivable increased7.4% this year, compared to a 16.0%increase in sales in the three months ended September 30, 2014; much of the increase in account receivable can be attributed to the Knox acquisition which included $20,100 of accounts receivable. Now that all U.S. Service Center Based Distribution Businesses are fully operational on SAP, we expect DSO and past due balances to begin returning to more traditional levels.

Approximately 5.8% of our accounts receivable balances are more than 90 days past due, a slight increase from 5.7% at June 30, 2014. On an overall basis, our provision for losses from uncollected receivables represents 0.06% of our sales in the three months ended September 30, 2014. Historically, this percentage is around 0.15%. Management believes the overall receivables aging and provision for losses on uncollected receivables are at reasonable levels.

Inventory Analysis

Inventories are valued at the lower of cost or market, using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories.  Management uses an inventory turnover ratio to monitor and evaluate inventory.  Management calculates this ratio on an annual as well as a quarterly basis, and believes that using average costs to determine the inventory turnover ratio instead of LIFO costs provides a more useful analysis.  The annualized inventory turnover based on average costs for the period ended September 30, 2014 and at June 30, 2014 was 3.8.  We believe our inventory turnover ratio at the end of the year will be similar or slightly better than the ratio at September 30, 2014.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Cautionary Statement Under Private Securities Litigation Reform Act

Management’s Discussion and Analysis, contains statements that are forward-looking based on management’s current expectations about the future. Forward-looking statements are often identified by qualifiers, such as “guidance”, “expect”, “believe”, “plan”, “intend”, “will”, “should”, “could”, “would”, “anticipate”, “estimate”, “forecast”, “may”, "optimistic" and derivative or similar words or expressions. Similarly, descriptions of objectives, strategies, plans, or goals are also forward-looking statements. These statements may discuss, among other things, expected growth, future sales, future cash flows, future capital expenditures, future performance, and the anticipation and expectations of the Company and its management as to future occurrences and trends. The Company intends that the forward-looking statements be subject to the safe harbors established in the Private Securities Litigation Reform Act of 1995 and by the Securities and Exchange Commission in its rules, regulations and releases.

Readers are cautioned not to place undue reliance on any forward-looking statements. All forward-looking statements are based on current expectations regarding important risk factors, many of which are outside the Company’s control. Accordingly, actual results may differ materially from those expressed in the forward-looking statements, and the making of those statements should not be regarded as a representation by the Company or any other person that the results expressed in the statements will be achieved. In addition, the Company assumes no obligation publicly to update or revise any forward-looking statements, whether because of new information or events, or otherwise, except as may be required by law.

Important risk factors include, but are not limited to, the following: risks relating to the operations levels of our customers and the economic factors that affect them; changes in the prices for products and services relative to the cost of providing them; reduction in supplier inventory purchase incentives; loss of key supplier authorizations, lack of product availability, or changes in supplier distribution programs; the cost of products and energy and other operating costs; changes in customer preferences for products and services of the nature and brands sold by us; changes in customer procurement policies and practices; competitive pressures; our reliance on information systems; our ability to implement our ERP system in a timely, cost-effective, and competent manner, limiting disruption to our business, and to capture its planned benefits while maintaining an adequate internal control environment; the impact of economic conditions on the collectability of trade receivables; reduced demand for our products in targeted markets due to reasons including consolidation in customer industries; our ability to retain and attract qualified sales and customer service personnel and other skilled managers and professionals; our ability to identify and complete acquisitions, integrate them effectively, and realize their anticipated benefits; the variability, timing and nature of new business opportunities including acquisitions, alliances, customer relationships, and supplier authorizations; the incurrence of debt and contingent liabilities in connection with acquisitions; our ability to access capital markets as needed on reasonable terms; disruption of operations at our headquarters or distribution centers; risks and uncertainties associated with our foreign operations, including volatile economic conditions, political instability, cultural and legal differences, and currency exchange fluctuations; the potential for goodwill and intangible asset impairment; changes in accounting policies and practices; organizational changes within the Company; the volatility of our stock price and the resulting impact on our consolidated financial statements; risks related to legal proceedings to which we are a party; adverse regulation and legislation, both enacted and under consideration, including with respect to federal tax policy (e.g., affecting the use of the LIFO inventory accounting method and the taxation of foreign-sourced income); and the occurrence of extraordinary events (including prolonged labor disputes, power outages,telecommunication outages, terrorist acts, earthquakes, extreme weather events, other natural disasters, fires, floods, and accidents). Other factors and unanticipated events could also adversely affect our business, financial condition or results of operations.

We discuss certain of these matters more fully throughout our "Management's Discussion and Analysis" as well as other of our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended June 30, 2014.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk, see Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended June 30, 2014.

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APPLIED INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company's management, under the supervision and with the participation of the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), evaluated the effectiveness of the Company's disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report. Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

The Company has undertaken a multi-year ERP (SAP) project to transform the Company's technology platforms and enhance its business information and transaction systems. The Company has completed its SAP implementation in its Western Canadian operating locations and U.S. operating locations selected for transformation. During fiscal year 2015, the Company will evaluate and determine a deployment schedule for the remaining Eastern Canadian operating locations, as well as refine our current business and system processes. In fiscal 2014, the Company initiated the transformation of its financial and accounting systems including fixed assets, general ledger and consolidation systems and expects to complete these enhancements in fiscal 2015. Changes in the Company's key business applications and financial processes as a result of the continuing implementation of SAP and other business systems are being evaluated by management. The Company is designing processes and internal controls to address changes in the Company's internal control over financial reporting as a result of the SAP implementation. This ongoing SAP implementation presents risks to maintaining adequate internal controls over financial reporting.

Other than as described above, there have not been any changes in internal control over financial reporting during the three months ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

23

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company is a party to pending legal proceedings with respect to various product liability, commercial, and other matters. Although it is not possible to predict the outcome of these proceedings or the range of reasonably possible loss, the Company believes, based on circumstances currently known, that the likelihood is remote that the ultimate resolution of any of these proceedings will have, either individually or in the aggregate, a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of common stock in the quarter ended September 30, 2014 were as follows:

Period	(a) Total Number of Shares (1)	(b) Average Price Paid per Share ($)	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 1, 2014 to July 31, 2014	50,492	50.10	50,300	331,300
August 1, 2014 to August 31, 2014	74,167	48.49	74,100	257,200
September 1, 2014 to September 30, 2014	89,600	47.83	89,600	167,000
Total	214,259	48.60	214,000	167,000

(1) During the quarter the Company purchased 259 shares in connection with the Deferred Compensation Plan.

(2) On October 25, 2011, the Board of Directors authorized the purchase of up to 1.5 million shares of the Company's common stock. The Company publicly announced the authorization that day. Purchases can be made in the open market or in privately negotiated transactions. Subsequent to the end of the first quarter, on October 27, 2014, the Board of Directors authorized the repurchase of up to an additional 1.5 million shares of the Company's common stock, which can be purchased in the open market and negotiated transactions.

ITEM 5.        Other Information

On October 30, 2014, the Company entered into certain 3.21% Series D Notes (“Notes”) in the aggregate amount of $50 million pursuant to a Request for Purchase dated October 22, 2014 made under the Private Shelf Agreement dated November 27, 1996, as amended, between the Company and Prudential Investment Management, Inc. (assignee of The Prudential Insurance Company of America).

The Notes will bear interest at the rate of 3.21% payable semi-annually in arrears. Equal installments of principal are due on each of October 31, 2019 and 2023. The Notes mature on October 31, 2023.

24

ITEM 6.         Exhibits

Exhibit No.	Description
3.1	Amended and Restated Articles of Incorporation of Applied Industrial Technologies, Inc., as amended on October 25, 2005 (filed as Exhibit 3(a) to the Company’s Form 10-Q for the quarter ended December 31, 2005, SEC File No. 1-2299, and incorporated here by reference).
3.2	Code of Regulations of Applied Industrial Technologies, Inc., as amended on October 19, 1999 (filed as Exhibit 3(b) to the Company’s Form 10-Q for the quarter ended September 30, 1999, SEC File No. 1-2299, and incorporated here by reference).
4.1	Certificate of Merger of Bearings, Inc. (Ohio) (now named Applied Industrial Technologies, Inc.) and Bearings, Inc. (Delaware) filed with the Ohio Secretary of State on October 18, 1988, including an Agreement and Plan of Reorganization dated September 6, 1988 (filed as Exhibit 4(a) to the Company’s Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference).
4.2	Private Shelf Agreement dated as of November 27, 1996, as amended through February 4, 2013, between Applied Industrial Technologies, Inc. and Prudential Investment Management, Inc. (assignee of The Prudential Insurance Company of America), conformed to show all amendments (filed as Exhibit 4.3 to the Company's Form 10-Q for the quarter ended March 31, 2013, SEC File No. 1-2299, and incorporated here by reference).
4.3	Amendment dated October 30, 2014 to Private Shelf Agreement between Applied Industrial Technologies, Inc. and Prudential Investment Management, Inc.
4.4	Request for Purchase dated May 30, 2014 and 3.19% Series C Notes dated July 1, 2014, under Private Shelf Agreement dated November 27, 1996, as amended, between Applied Industrial Technologies, Inc. and Prudential Investment Management, Inc. (filed as Exhibit 10.1 to Applied's Form 8-K dated July 1, 2014, SEC File No. 1-2299, and incorporated here by reference).
4.5	Request for Purchase dated October 22, 2014 and 3.21% Series D Notes dated October 30, 2014, under Private Shelf Agreement dated November 27, 1996, as amended, between Applied Industrial Technologies, Inc. and Prudential Investment Management, Inc.
4.6	Credit Agreement dated as of May 15, 2012, among Applied Industrial Technologies, Inc., KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 4 to the Company's Form 8-K dated May 17, 2012, SEC File No. 1-2299, and incorporated here by reference).
4.7	Credit Agreement dated as of April 25, 2014, among Applied Industrial Technologies, Inc., KeyBank National Association, as Agent, and various financial institutions (filed as Exhibit 10.1 to Applied's Form 8-K dated May 1, 2014, SEC File No. 1-2299, and incorporated here by reference).
10.1	Form of Change in Control Agreement between Applied Industrial Technologies, Inc. and each of Carl E. Will and Kurt W. Loring.
10.2	Schedule of participants in the Key Executive Restoration Plan, as amended and restated.
15	Independent Registered Public Accounting Firm’s Awareness Letter.
18	Preferability letter from Independent Registered Public Accounting Firm Regarding Change in Accounting Principle.
31	Rule 13a-14(a)/15d-14(a) certifications.
32	Section 1350 certifications.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

The Company will furnish a copy of any exhibit described above and not contained herein upon payment of a specified reasonable fee which shall be limited to the Company’s reasonable expenses in furnishing the exhibit.

25

Certain instruments with respect to long-term debt have not been filed as exhibits because the total amount of securities authorized under any one of the instruments does not exceed 10 percent of the total assets of the Company and its subsidiaries on a consolidated basis. The Company agrees to furnish to the Securities and Exchange Commission, upon request, a copy of each such instrument.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		APPLIED INDUSTRIAL TECHNOLOGIES, INC.
		(Company)
Date:	November 4, 2014	By: /s/ Neil A.Schrimsher
		Neil A. Schrimsher
		President & Chief Executive Officer
Date:	November 4, 2014	By:/s/ Mark O. Eisele
		Mark O. Eisele
		Vice President-Chief Financial Officer & Treasurer

26

EX-4.3

EXHIBIT 4.3

October 30, 2014

Applied Industrial Technologies, Inc.

One Applied Plaza

Cleveland, Ohio 44115

Re: Amendment to Private Shelf Agreement

Ladies and Gentlemen:

Reference is made to that certain Private Shelf Agreement dated as of November 27, 1996 (as amended by that certain letter amendment dated as of January 30, 1998, that certain letter agreement dated as of November 5, 1998, that certain letter amendment dated as of October 24, 2000, that certain letter amendment dated as of November 14, 2003, that certain letter amendment dated as of February 25, 2004, that certain letter amendment dated as of March 30, 2007, that certain letter amendment dated as of February 16, 2010 and that certain letter amendment dated as of February 4, 2013, the “Agreement”) between Applied Industrial Technologies, Inc., an Ohio corporation formerly known as Bearings, Inc. (the “Company”), on the one hand, and Prudential Investment Management, Inc. (“Prudential”), and each other Prudential Affiliate which has become or becomes a party thereto, on the other hand. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

Pursuant to the request of the Company and in accordance with the provisions of paragraph 11C of the Agreement, the parties hereto agree as follows:

SECTION 1.Amendment. From and after the date this letter becomes effective in accordance with its terms, the Agreement is amended as follows:

1.1    The cover page to the Agreement is hereby amended to delete in its entirety the amount “$150,000,000” appearing thereon.

1.2    Paragraph 1 of the Agreement is each hereby amended to delete in its entirety the amount “$150,000,000” appearing therein and to insert “$270,000,000” in lieu thereof.

1.3    Paragraph 2B of the Agreement is amended to delete in its entirety clause (i) thereof and to substitute therefore the following: “(i) October 30, 2017 and”.

1.4    Paragraph 8 of the Agreement is hereby amended by inserting a new paragraph 8P at the end thereof which shall read as follows:

“8P.Foreign Assets Control Regulations, Etc.

(1)Neither the Company nor any Controlled Entity (i) is a Blocked Person, (ii) has been notified that its name appears or may in the future appear on a State Sanctions List or (iii) is a target of sanctions that have been imposed by the United Nations or the European Union.

(2)Neither the Company nor any Controlled Entity (i) has violated, been found in violation of, or been charged or convicted under, any applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws or (ii) to the Company’s knowledge, is under investigation by any Governmental Authority for possible violation of any U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption Laws.

(3)No part of the proceeds from the sale of the Notes hereunder:

(i)constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (1) in connection with any investment in, or any transactions or dealings with, any Blocked Person, (2) for any purpose that would cause any Purchaser to be in violation of any U.S. Economic Sanctions Laws or (3) otherwise in violation of any U.S. Economic Sanctions Laws;

(ii)will be used, directly or indirectly, in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Money Laundering Laws; or

(iii)will be used, directly or indirectly, for the purpose of making any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage, in each case which would be in violation of, or cause any Purchaser to be in violation of, any applicable Anti-Corruption Laws.

(4)The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable U.S. Economic Sanctions Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.”

1.5    Clauses (iv) and (v) of paragraph 9B of the Agreement are amended and restated in their entirety to read as follows:

“(iv)the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee

organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (iv); or

(v)the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (v); or”

1.6    Paragraph 10A of the Agreement is amended by amending and restating the following definitions contained therein:

“Designated Spread” shall mean (i) 0% with respect to the Series A Notes, (ii) 0.50% with respect to the Series B Notes and Series C Notes and (iii) unless otherwise specified in the Confirmation of Acceptance with respect thereto, 0.50% for any other Series of Notes.

“Reinvestment Yield” shall mean, with respect to the Called Principal of any Note, the Designated Spread over the yield to maturity implied by (i) the ask-side yields reported as of 10:00 a.m. (New York City local time) on the Business Day next preceding the Settlement Date with respect to such Called Principal for the most recent actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date on the display designated as “Page PX1” on Bloomberg Financial Markets (or such other display as may replace Page PX1 on Bloomberg Financial Markets or, if Bloomberg Financial Markets shall cease to report such yields or shall cease to be Prudential Capital Group’s customary source of information for calculating yield-maintenance amounts on privately placed notes, then such source as is then Prudential Capital Group’s customary source of such information), or (ii) if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable (including by way of interpolation), the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. In the case of each determination under clause (i) or (ii) of the preceding sentence, such implied yield shall be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable U.S. Treasury security with the maturity closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to that number of decimal places as appears in the coupon of the applicable Note.

1.7    Paragraph 10B of the Agreement is amended by amending and restating the definition of “Blocked Person” contained therein to read as follows:

“Blocked Person” shall mean (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by OFAC, (ii) a Person, entity,

organization, country or regime that is blocked or a target of sanctions that have been imposed under U.S. Economic Sanctions Laws or (iii) a Person that is an agent, department or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, any Person, entity, organization, country or regime described in clause (i) or (ii).

1.8    Paragraph 10B of the Agreement is amended to add the following new definitions in the proper alphabetical order:

“Anti-Corruption Laws” shall mean any law or regulation in a U.S. or any non-U.S. jurisdiction regarding bribery or any other corrupt activity, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.

“Anti-Money Laundering Laws” shall mean any law or regulation in a U.S. or any non-U.S. jurisdiction regarding money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes, including the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act.

“CISADA” shall mean the Comprehensive Iran Sanctions, Accountability and Divestment Act.

“Governmental Authority” shall mean

(a)the government of

(i)the United States of America or any state or other political subdivision thereof, or

(ii)any other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or

(b)any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

“Governmental Official” shall mean any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.

“Series C Notes” shall mean the 3.19% Series C Senior Notes executed by the Company pursuant to this Agreement in the original aggregate principal amount of $120,000,000 and due July 1, 2022.

“State Sanctions List” shall mean a list that is adopted by any state Governmental Authority within the United States of America pertaining to Persons that engage in investment or other commercial activities in Iran or any other country that is a target of economic sanctions imposed under U.S. Economic Sanctions Laws.

“U.S. Economic Sanctions Laws” shall mean those laws, executive orders, enabling legislation or regulations administered and enforced by the United States pursuant to which economic sanctions have been imposed on any Person, entity, organization, country or regime, including the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan Accountability and Divestment Act and any other OFAC Sanctions Program.

1.9    Paragraph 11H of the Agreement is amended to add the following paragraph at the end thereof:

“In the event that as a condition to receiving access to information relating to the Company or its Subsidiaries in connection with the transactions contemplated by or otherwise pursuant to this Agreement, Prudential, any Purchaser or holder of a Note is required to agree to a confidentiality undertaking (whether through IntraLinks, another secure website, a secure virtual workspace or otherwise) which is different from this paragraph 11H, this paragraph 11H shall not be amended thereby and, as between Prudential, such Purchaser or such holder and the Company, this paragraph 11H shall supersede any such other confidentiality undertaking.”

1.10    The Company and Prudential expressly agree and acknowledge that as of the date hereof the Available Facility Amount is $50,000,000. For avoidance of doubt, for the purposes of the Agreement, as of October 30, 2014, the Company’s 3.21% Series D Senior Notes due October 31, 2023 to be in the original aggregate principal amount of $50,000,000, with respect to which the Company accepted an interest rate quote on October 22, 2014, constitute Accepted Notes not yet purchased or sold hereunder. NOTWITHSTANDING THE FOREGOING, THIS AMENDMENT AND THE AGREEMENT HAVE BEEN ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE PRIVATE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO THE SPECIFIC PURCHASES OF PRIVATE SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.

SECTION 2.Representations and Warranties. The Company and each Subsidiary party hereto hereby represents and warrants to Prudential and each holder of Notes that: (a) the execution and delivery of this letter has been duly authorized by all necessary corporate or limited liability company, as applicable, action on behalf of the Company and each such Subsidiary and this letter has been duly executed and delivered by a duly authorized officer of the Company and each such Subsidiary, and all necessary or required consents to and approvals of this letter have been obtained and are in full force and effect, (b) each representation and warranty set forth in paragraph 8 of the Agreement and Section 6 of the Guaranty of Payment of Debt is true and correct as of the date of the execution and delivery of this letter by the Company and each such Subsidiary with the same effect as if made on such date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they were true and correct as of such earlier date), and (c) no Default or Event of Default exists under the Agreement as of the date hereof.

SECTION 3. Conditions Precedent. The amendments described in Section 1 above shall become effective on the date (the “Effective Date”) when each of the following conditions has been satisfied:

3.1Documents. Prudential and each holder of a Note shall have received counterparts of this letter executed by the Company, each Subsidiary party to a Guaranty of Payment of Debt, Prudential and the Required Holder(s).

3.2Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated by this letter shall be satisfactory to the Required Holder(s), and the Required Holder(s) shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.

SECTION 4.Reference to and Effect on Note Agreement and Notes; Ratification of Documents. Upon the effectiveness of the amendments in Section 1 of this letter, each reference to the Agreement in any Note, the Guaranty of Payment of Debt or any document relating to the Agreement shall mean and be a reference to the Agreement, as modified by this letter. Except as specifically set forth in Section 1 hereof, the Agreement, the Notes, the Guaranty of Payment of Debt and each other document relating thereto shall remain in full force and effect and are hereby ratified and confirmed in all respects. Except as specifically stated in this letter, the execution, delivery and effectiveness of this letter shall not (a) amend the Agreement, any Note, the Guaranty of Payment of Debt or any other document relating thereto, (b) operate as a waiver of any right, power or remedy of Prudential or any holder of the Notes, or (c) constitute a waiver of, or consent to any departure from, any provision of the Agreement, any Note, the Guaranty of Payment of Debt or any other document relating thereto at any time. The execution, delivery and effectiveness of this letter shall not be construed as a course of dealing or other implication that Prudential or any holder of the Notes has agreed to or is prepared to grant any consents or agree to any amendment to the Agreement in the future, whether or not under similar circumstances.

SECTION 5.Confirmation of Guarantees. By its signature below, each Subsidiary party to a Guaranty of Payment of Debt agrees and consents to the terms and provisions of this letter and agrees that its Guaranty of Payment of Debt shall remain in full force and effect and is hereby ratified and confirmed in all respects after giving effect to this letter.

SECTION 6. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS LETTER TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER JURISDICTION).

SECTION 7. Counterparts; Section Titles. This letter may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. The section titles contained in this letter are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

[signature page follows]

Very truly yours,

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

By: /s/ Joshua Shipley        

Vice President

PAR U HARTFORD LIFE & ANNUITY

COMFORT TRUST

PAR U HARTFORD LIFE INSURANCE

COMFORT TRUST

By:Prudential Arizona Reinsurance Universal Company (as Grantor)

By:Prudential Investment Management, Inc. (as Investment Manager)

By: /s/ Joshua Shipley        

Name: Joshua Shipley

Title: Vice President

WILLIAM PENN LIFE INSURANCE

  COMPANY OF NEW YORK

FARMERS NEW WORLD LIFE INSURANCE

COMPANY

GLOBE LIFE AND ACCIDENT INSURANCE

COMPANY

LIBERTY NATIONAL LIFE INSURANCE

COMPANY

FAMILY HERITAGE LIFE INSURANCE

  COMPANY OF AMERICA

MTL INSURANCE company

By:Prudential Private Placement Investors,

L.P. (as Investment Advisor)

By:Prudential Private Placement Investors, Inc.

(as its General Partner)

By: /s/ Joshua Shipley        

Vice President

PRIVATE PLACEMENT TRUST

INVESTORS, LLC

By:Prudential Private Placement Investors,

L.P. (as Managing Member)

By:Prudential Private Placement Investors, Inc.

(as its General Partner)

By: /s/ Joshua Shipley        

Vice President

Agreed and Accepted:

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

By: /s/ Mark O. Eisele                    

Name: Mark O. Eisele                

Title: Vice President                    

Consented to:

APPLIED INDUSTRIAL TECHNOLOGIES-CA LLC

APPLIED INDUSTRIAL TECHNOLOGIES-DIXIE, INC.

APPLIED INDUSTRIAL TECHNOLOGIES-PA LLC

AIR- HYDRAULIC SYSTEMS, INC.

ESI ACQUISITION CORPORATION

BEARINGS PAN AMERICAN, INC.

BEARINGS SALES AND SERVICES INC.

AIR DRAULICS ENGINEERING CO.

APPLIED INDUSTRIAL TECHONOLOGIES-CAPITAL INC.

SPENCER FLUID POWER, INC.

APPLIED FLUID POWER HOLDINGS, LLC

BAY ADVANCED TECHNOLOGIES, LLC

CAROLINA FLUID COMPONENTS, LLC

DTS FLUID POWER, LLC

HYDROAIR HUGHES, LLC

FLUIDTECH, LLC

POWER SYSTEMS, LLC

A&H FLUID TECHNOLOGIES, INC.

APPLIED MAINTENANCE SUPPLIES & SOLUTIONS, LLC

AIT INTERNATIONAL, INC.

APPLIED US, L.P.

APPLIED INDUSTRIAL TECHNOLOGIES - PACIFIC LLC

APPLIED CANADA HOLDINGS, ULC

APPLIED LUXEMBOURG S.À.R.L.

APPLIED NORTHERN HOLDINGS, ULC

APPLIED NOVA SCOTIA COMPANY

KNOX OIL FIELD SUPPLY, INC.

RELIANCE INDUSTRIAL PRODUCTS USA, LTD.

By: /s/ Mark O. Eisele                

Name: Mark O. Eisele                    

Title: Vice President                    

EX-4.5

EXHIBIT 4.5

REQUEST FOR PURCHASE

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

Reference is made to the Private Shelf Agreement (as amended from time to time, the “Agreement”), dated as of November 27, 1996, between Applied Industrial Technologies, Inc., an Ohio corporation formerly known as Bearings, Inc. (the “Company”), and Prudential Investment Management, Inc. and each Prudential Affiliate which becomes a party thereto. All terms used herein that are defined in the Agreement have the respective meanings specified in the Agreement.

Pursuant to Paragraph 2C of the Agreement, the Company hereby makes the following Request for Purchase:

1. Aggregate principal amount of

the Notes covered hereby

(the “Notes”): $50,000,000.00

2. Individual specifications of the Notes:

Principal Amount	Final Maturity Date	Principal Installment Dates and Amounts	Interest Payment Period
$50,000,000.00	October 31, 2023	October 31, 2019 - $25,000,000.00	Semi-annually, in arrears

3. Use of proceeds of the Notes: To fund acquisitions and for general corporate purposes.

4. Proposed day for the closing of the purchase and sale of the Notes: October 30, 2014

5. The purchase price of the Notes is to be transferred to:

Name, Address and ABA Routing Number of Bank	Number of Account	Name and Telephone No. of Bank Officer
Key Bank		J. Roderick MacDonald
127 Public Square		216.689.4445
Cleveland, OH 44114

6. The Company certifies (a) that the representations and warranties contained in paragraph 8 of the Agreement are true on and as of the date of this Request for Purchase except to the extent of changes caused by the transactions contemplated in the Agreement and (b) that there exists on the date of this Request for Purchase no Event of Default or Default.

Dated: October 22, 2014

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

By: /s/ Mark O. Eisele            

Authorized Officer

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

SENIOR NOTE

(Fixed Rate)

SERIES D

No. 2014 D-1PPN: 03820C B*5

ORIGINAL PRINCIPAL AMOUNT: $14,100,000

ORIGINAL ISSUE DATE: October 30, 2014

INTEREST RATE: 3.21%

INTEREST PAYMENT DATES: April 30 and October 31 of each year, commencing on April 30, 2015

FINAL MATURITY DATE: October 31, 2023

PRINCIPAL INSTALLMENT DATES AND AMOUNTS: October 31, 2019 - $7,050,000

FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., formerly known as BEARINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Ohio, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, or registered assigns, the principal sum of FOURTEEN MILLION ONE HUNDRED THOUSAND DOLLARS, payable in installments on the Principal Installment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, and any overdue payment of any Yield-Maintenance Amount (as defined in the Note Agreement referred to below), payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% plus the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, National Association from time to time in New York City as its Prime Rate.

Payments of principal of, and interest on, and any Yield-Maintenance Amount payable with respect to, this Note are to be made at the main office of the JPMorgan Chase Bank, National Association in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to a Private Shelf Agreement, dated as of November 27, 1996 (herein called the “Agreement”), between the Company, on the one hand, and The Prudential Insurance Company of America and each “Prudential Affiliate” (as defined in the Agreement) which becomes a party thereto, on the other hand, and is entitled to the benefits thereof. As provided in the Agreement, this Note is subject to prepayment, in whole or from time to time in part on the terms specified in the Agreement.

This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration

of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

In case an Event of Default, as defined in the Agreement, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement.

[Signature Page Follows]

THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

By: /s/ Mark O. Eisele            

Title: Vice President            

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

SENIOR NOTE

(Fixed Rate)

SERIES D

No. 2014 D-2PPN: 03820C B*5

ORIGINAL PRINCIPAL AMOUNT: $17,500,000

ORIGINAL ISSUE DATE: October 30, 2014

INTEREST RATE: 3.21%

INTEREST PAYMENT DATES: April 30 and October 31 of each year, commencing on April 30, 2015

FINAL MATURITY DATE: October 31, 2023

PRINCIPAL INSTALLMENT DATES AND AMOUNTS: October 31, 2019 - $8,750,000

FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., formerly known as BEARINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Ohio, hereby promises to pay to THE GIBRALTAR LIFE INSURANCE CO., LTD., or registered assigns, the principal sum of SEVENTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS, payable in installments on the Principal Installment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, and any overdue payment of any Yield-Maintenance Amount (as defined in the Note Agreement referred to below), payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% plus the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, National Association from time to time in New York City as its Prime Rate.

Payments of principal of, and interest on, and any Yield-Maintenance Amount payable with respect to, this Note are to be made at the main office of the JPMorgan Chase Bank, National Association in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to a Private Shelf Agreement, dated as of November 27, 1996 (herein called the “Agreement”), between the Company, on the one hand, and The Prudential Insurance Company of America and each “Prudential Affiliate” (as defined in the Agreement) which becomes a party thereto, on the other hand, and is entitled to the benefits thereof. As provided in the Agreement, this Note is subject to prepayment, in whole or from time to time in part on the terms specified in the Agreement.

This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration

of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

In case an Event of Default, as defined in the Agreement, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement.

[Signature Page Follows]

THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

By: /s/ Mark O. Eisele            

Title: Vice President            

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

SENIOR NOTE

(Fixed Rate)

SERIES D

No. 2014 D-3PPN: 03820C B*5

ORIGINAL PRINCIPAL AMOUNT: $7,500,000

ORIGINAL ISSUE DATE: October 30, 2014

INTEREST RATE: 3.21%

INTEREST PAYMENT DATES: April 30 and October 31 of each year, commencing on April 30, 2015

FINAL MATURITY DATE: October 31, 2023

PRINCIPAL INSTALLMENT DATES AND AMOUNTS: October 31, 2019 - $3,750,000

FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., formerly known as BEARINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Ohio, hereby promises to pay to PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY, or registered assigns, the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS, payable in installments on the Principal Installment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, and any overdue payment of any Yield-Maintenance Amount (as defined in the Note Agreement referred to below), payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% plus the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, National Association from time to time in New York City as its Prime Rate.

Payments of principal of, and interest on, and any Yield-Maintenance Amount payable with respect to, this Note are to be made at the main office of the JPMorgan Chase Bank, National Association in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to a Private Shelf Agreement, dated as of November 27, 1996 (herein called the “Agreement”), between the Company, on the one hand, and The Prudential Insurance Company of America and each “Prudential Affiliate” (as defined in the Agreement) which becomes a party thereto, on the other hand, and is entitled to the benefits thereof. As provided in the Agreement, this Note is subject to prepayment, in whole or from time to time in part on the terms specified in the Agreement.

This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration

of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

In case an Event of Default, as defined in the Agreement, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement.

[Signature Page Follows]

THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

By: /s/ Mark O. Eisele        

Title: Vice President            

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

SENIOR NOTE

(Fixed Rate)

SERIES D

No. 2014 D-4PPN: 03820C B*5

ORIGINAL PRINCIPAL AMOUNT: $7,630,000

ORIGINAL ISSUE DATE: October 30, 2014

INTEREST RATE: 3.21%

INTEREST PAYMENT DATES: April 30 and October 31 of each year, commencing on April 30, 2015

FINAL MATURITY DATE: October 31, 2023

PRINCIPAL INSTALLMENT DATES AND AMOUNTS: October 31, 2019 - $3,815,000

FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., formerly known as BEARINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Ohio, hereby promises to pay to FARMERS INSURANCE EXCHANGE, or registered assigns, the principal sum of SEVEN MILLION SIX HUNDRED THIRTY THOUSAND DOLLARS, payable in installments on the Principal Installment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, and any overdue payment of any Yield-Maintenance Amount (as defined in the Note Agreement referred to below), payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% plus the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, National Association from time to time in New York City as its Prime Rate.

Payments of principal of, and interest on, and any Yield-Maintenance Amount payable with respect to, this Note are to be made at the main office of the JPMorgan Chase Bank, National Association in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to a Private Shelf Agreement, dated as of November 27, 1996 (herein called the “Agreement”), between the Company, on the one hand, and The Prudential Insurance Company of America and each “Prudential Affiliate” (as defined in the Agreement) which becomes a party thereto, on the other hand, and is entitled to the benefits thereof. As provided in the Agreement, this Note is subject to prepayment, in whole or from time to time in part on the terms specified in the Agreement.

This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration

of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

In case an Event of Default, as defined in the Agreement, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement.

[Signature Page Follows]

THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

By: /s/ Mark O. Eisele        

Title: Vice President            

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

SENIOR NOTE

(Fixed Rate)

SERIES D

No. 2014 D-5PPN: 03820C B*5

ORIGINAL PRINCIPAL AMOUNT: $3,270,000

ORIGINAL ISSUE DATE: October 30, 2014

INTEREST RATE: 3.21%

INTEREST PAYMENT DATES: April 30 and October 31 of each year, commencing on April 30, 2015

FINAL MATURITY DATE: October 31, 2023

PRINCIPAL INSTALLMENT DATES AND AMOUNTS: October 31, 2019 - $1,635,000

FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., formerly known as BEARINGS, INC. (herein called the “Company”), a corporation organized and existing under the laws of the State of Ohio, hereby promises to pay to MID CENTURY INSURANCE COMPANY, or registered assigns, the principal sum of THREE MILLION TWO HUNDRED SEVENTY THOUSAND DOLLARS, payable in installments on the Principal Installment Dates and in the amounts specified above, and on the Final Maturity Date specified above in an amount equal to the unpaid balance of the principal hereof, with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest, and any overdue payment of any Yield-Maintenance Amount (as defined in the Note Agreement referred to below), payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% plus the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by JPMorgan Chase Bank, National Association from time to time in New York City as its Prime Rate.

Payments of principal of, and interest on, and any Yield-Maintenance Amount payable with respect to, this Note are to be made at the main office of the JPMorgan Chase Bank, National Association in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America.

This Note is one of a series of Senior Notes (herein called the “Notes”) issued pursuant to a Private Shelf Agreement, dated as of November 27, 1996 (herein called the “Agreement”), between the Company, on the one hand, and The Prudential Insurance Company of America and each “Prudential Affiliate” (as defined in the Agreement) which becomes a party thereto, on the other hand, and is entitled to the benefits thereof. As provided in the Agreement, this Note is subject to prepayment, in whole or from time to time in part on the terms specified in the Agreement.

This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration

of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.

In case an Event of Default, as defined in the Agreement, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement.

[Signature Page Follows]

THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

By: /s/ Mark O. Eisele        

Title: Vice President            

EX-10.1

EXHIBIT 10.1

CHANGE IN CONTROL AGREEMENT

Applied Industrial Technologies, Inc.

One Applied Plaza

Cleveland, Ohio 44115

[Date]

[Address]

Dear :

Applied Industrial Technologies, Inc. (the “Company”) considers it essential to the best interest of the Company and its shareholders that the Company’s management be encouraged to remain with the Company and to continue to devote their full attention to the Company’s business. The Company recognizes that the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Company’s Board of Directors (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the Company’s management, including you, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

In order to induce you to remain in the employ of the Company until the termination of your employment in conjunction with a “Change in Control” of the Company (as defined in Section 2 hereof), this letter agreement (“Agreement”) sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Company is terminated within the two year period immediately following any change in control of the Company either by you for “Good Reason” or by the Company “Without Cause” (both as defined in Section 3 hereof). In the event that a change in control of the Company does not occur, your severance benefits, if any, shall be determined without regard to this Agreement.

Nothing herein shall be construed so as to prevent either you or the Company from terminating your employment at any time, for cause or otherwise, subject only to the specific payment and other provisions hereinafter set forth in this Agreement in the event that a Change in Control of the Company occurs prior to the date your termination becomes effective. In addition, this Agreement shall be deemed terminated, and of no further force and effect, in the event that you cease to be a Board-elected officer or an appointed officer of the Company prior to a Change in Control. You hereby specifically acknowledge that your employment by the Company is employment-at-will, subject to termination by you, or by the Company, at any time with or without cause. You also acknowledge that such employment-at-will status cannot be modified except in a specific writing that has been authorized or ratified by the Board.

1. Continued Employment. The parties agree that you have advised the Company that, in consideration of, among other things, the Company’s entering into this Agreement with you, it is your present intention to remain in the employ of the Company unless and until there occurs a Change in Control.

2. Change in Control. No benefits shall be payable hereunder unless a Change in Control occurs and your employment with the Company is terminated within two years thereafter either by you for Good Reason or by the Company Without Cause. This Agreement is not intended to apply to termination of your employment by reason of Death, Disability or Retirement (as defined in Section 3 hereof). For purposes of this Agreement, a “Change in Control” of the Company shall mean:

(a) The Company is merged, consolidated or reorganized into or with another corporation or other legal person, and immediately after such merger, consolidation or reorganization, less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock (as that term is hereafter defined) of the Company immediately prior to such transaction;

(b) The Company sells all or substantially all of its assets to any other corporation or other legal person, and, immediately after such sale, less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such sale are held in the aggregate by the holders of Voting Stock of the Company immediately prior to such sale;

(c) There is a report filed or required to be filed on Schedule 13D or Schedule TO (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), disclosing that any person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing 30% or more of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of the Company (“Voting Stock”);

(d) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has occurred or will occur in the future pursuant to any then-existing contract or transaction; or

(e) If during any period of two consecutive years, individuals who at the beginning of any such period are the directors of the Company cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this subparagraph (e), each director who is first elected, or first nominated for election by the Company’s shareholders, by a vote of at least two-thirds of the directors of the Company (or a committee thereof) then still in office who were directors of the Company at the beginning of any such period will be deemed to have been a director of the Company at the beginning of such period.

Notwithstanding the events specified in subparagraphs (c) and (d) above, unless otherwise determined in a specific case by majority vote of the Board, a “Change in Control” shall not be deemed to have occurred solely because (i) the Company, (ii) an entity in which the Company directly or indirectly beneficially owns 50% or more of the voting securities or interest, or (iii) any Company-sponsored

employee stock ownership plan or any other employee benefit plan of the Company, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule TO, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial ownership by it of shares of Voting Stock, whether in excess of 30% or otherwise, or because the Company reports that a change in control of the Company has occurred or will occur in the future by reason of such beneficial ownership.

The first date upon which a Change in Control takes place shall be known as the “Effective Date.” Anything in this Agreement to the contrary notwithstanding, if a Change in Control occurs and if your employment with the Company is terminated prior to the date on which the Change in Control occurs, and if it is reasonably demonstrated by you that such termination (i) was at the request of a third party who had taken steps reasonably calculated to effect a Change in Control or (ii) was by the Company and arose with or in anticipation of a Change in Control, then for all purposes of this Agreement, your employment shall be deemed to have been terminated by the Company Without Cause under Section 3(f) of this Agreement and the “Effective Date” shall mean the date immediately prior to the Date of Termination (as defined in Section 3 hereof).

3. Termination of Employment. Your employment with the Company shall or may be terminated, as the case may be, for any of the following reasons; provided that in each case such termination of employment constitutes a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations issued thereunder (“Separation from Service”):

(a)Death. Termination of your employment with the Company due to your death;

(b)Retirement. Termination of your employment with the Company at or after the attainment of age sixty-five (65);

(c)Disability. Termination of your employment with the Company either by you or the Company after you are physically or mentally incapacitated for a period of one hundred eighty (180) consecutive days such that you cannot substantially perform your duties of employment with the Company on a full-time basis;

(d)Cause. Termination of your employment with the Company at any time for Cause. For purposes of this Agreement, “Cause” shall mean:

(i)the willful and continued failure by you to perform substantially your duties with the Company or one of its affiliates (other than for Disability or Good Reason), after a written demand for substantial performance is delivered to you by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that you have not substantially performed your duties, or

(ii)the willful engagement by you in illegal conduct or gross misconduct involving moral turpitude that is materially and demonstrably injurious to the Company.

For purposes of this Section 3(d), no act or failure to act shall be considered “willful” unless it is done, or omitted to be done, in bad faith or without your reasonable belief that such action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given you pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief

Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of the Company. Termination of your employment with the Company shall not be deemed to be for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, you are guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail;

(e)(A)409A Good Reason. You may separate from service with the Company for 409A Good Reason, provided that the notice and cure requirements set forth below are satisfied and provided further that such separation from service occurs no later than two years after one or more of the conditions constituting “409A Good Reason” occurs. For purposes of this Agreement, “409A Good Reason” shall mean:

(i)a material diminution in your authority, duties, or responsibilities;

(ii)a material diminution in the authority, duties, or responsibilities of the person to whom you reported immediately prior to the Effective Date;

(iii)a material diminution by the Company of your annual base salary that was provided to you by the Company immediately prior to the Effective Date;

(iv)a material change in the geographic location where you provide service to the Company; or

(v)any failure by the Company to comply with and satisfy Section 11 of this Agreement;

provided that, for purposes of this Section 3(e), 409A Good Reason shall not have occurred unless you give the Company notice within 90 days of the initial existence of the condition claimed by you in good faith to constitute 409A Good Reason and the Company has at least 30 days in which to remedy the condition.

(B) Other Good Reason. You may terminate your employment with the Company for Other Good Reason. For purposes of this Agreement, “Other Good Reason” shall mean:

(i)the assignment of any duties inconsistent in any respect with your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by you;

(ii)any failure by the Company to continue to provide you with an annual base salary, employee benefits and an opportunity to earn incentive and bonus compensation equal or greater to that which was provided to you by the Company immediately prior to the Effective Date other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after the receipt of notice thereof given by you;

(iii)the Company’s requiring you to be based at or generally work from any location other than the location that you were based at or generally worked from prior to the Effective Date or the Company’s requiring you to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date; or

(iv)any failure by the Company to comply with and satisfy Section 11 of this Agreement.

For purposes of this Section 3(e)(B), your good faith determination of “Other Good Reason” shall be conclusive. You shall specify in your notice of separation from service with the Company under Section 3(e)(A) or termination of employment under Section 3(e)(B) whether your separation or termination is for 409A Good Reason or Other Good Reason. If you fail to specify whether your notice is given pursuant to Section 3(e)(A) or Section 3(e)(B), the Company will presume that the notice is given pursuant to Section 3(e)(B). Collectively, 409A Good Reason and Other Good Reason may be collectively referred to herein as “Good Reason.” For purposes of this Agreement, “Good Reason” shall not exist if you have given your prior written consent to any of the events that would otherwise constitute “Good Reason”.

(f)Without Cause. The Company may terminate your employment with the Company Without Cause. For purposes of this Agreement the term “Without Cause” shall mean termination of your employment for reasons other than for Death, Retirement, Disability or Cause. Notwithstanding any provision herein to the contrary, if, at any time prior to a Change in Control of the Company, you receive notice from the Company that you will be terminated Without Cause and will receive severance benefits under another arrangement between you and the Company, no benefits shall be payable to you hereunder.

(g)Date of Termination. Except in the case of Death, termination of your employment shall be effective as of the earlier of the date specified by either you or the Company in a written notice of termination (“Notice of Termination”) to the other party hereto or the date that you incur a Separation from Service (hereinafter referred to as the “Date of Termination”).

4. Severance Pay.

(a)Amount of Severance Pay. If a Change in Control of the Company occurs and within two years thereafter your employment with the Company is terminated either by you for Good Reason or by the Company Without Cause, then in addition to all other benefits which you have earned prior to such termination or to which you are otherwise entitled, the Company shall pay to you the following amounts:

(i)your full base salary earned through the Date of Termination at the rate in effect ten days prior to the date Notice of Termination is given, to the extent not theretofore paid;

(ii)an amount equal to the product of (A) the higher of your annual base salary in effect prior to the Effective Date or your annual base salary at the highest rate in effect at any time since any Change in Control of the Company (including any annual base salary amounts deferred under any non-qualified deferred compensation program of the Company and any elective contributions of annual base salary that are made by or on behalf of you under any plan maintained by the Company that are not includible in gross income under

Section 125 or 402(e) (3) of the Internal Revenue Code of 1986, as amended, but excluding moving or educational reimbursement expenses, amounts realized from the exercise of any stock options or stock appreciation rights (“SARs”) or the vesting of other equity awards, and imputed income attributable to any fringe benefit) and (B) the lesser of the number one-and-one-half (1½) or a fraction the numerator of which is the number of months from and including the month in which the Date of Termination occurs to and including the month in which you would attain the age sixty-five and the denominator of which is twelve;

(iii)in lieu of annual incentive compensation, commissions, and bonuses that would otherwise be payable, an amount equal to the product of (A) your target annual incentive compensation, commissions, and bonuses (excluding amounts realized from the exercise of any stock options or SARs or the vesting of other equity awards), based on the deemed achievement of performance goals at the 100% level, for the then-current fiscal year of the Company and (B) the lesser of the number one-and-one-half (1½) or a fraction the numerator of which is the number of months from and including the month in which the Date of Termination occurs to and including the month in which you would attain the age sixty-five and the denominator of which is twelve; and

(iv)in lieu of either shares of Common Stock of the Company, without par value (“Company Shares”) issuable upon exercise of options (“Options”) and Company Shares issuable pursuant to any SARs, if any, granted to you under any Company stock option or equity incentive plan (which Options or SARs shall be deemed canceled upon the making of the payment herein referred to), you shall receive an amount in cash equal to the aggregate spread between the exercise prices of all such Options and the aggregate value of such SARs that are outstanding and held by you that are then fully vested or exercisable and the mean of the high and low trading prices of Company Shares on the New York Stock Exchange on the Date of Termination;

provided, however, in the event it is determined that any payment or distribution to or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement or similar right (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto), or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereafter collectively referred to as the “Excise Tax”), then in lieu of such Payments, you shall be entitled to elect to receive the greatest amount of Payments to which you are entitled without triggering the Excise Tax and Applied will reasonably cooperate with you in designating those particular types of Payments (e.g., welfare benefits, cash compensation, or outplacement benefits) that shall be paid and those that shall be forfeited or rescinded so as to avoid triggering the Excise Tax.

(b)Form of Severance Payment. Severance amounts hereunder shall be paid in cash in a lump sum payment (or payments) at the time(s) provided in Section 4(c).

(c)Time of Payment(s).

(i)Specified Employee. If at the Date of Termination you are a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (“Specified Employee”), no payment shall be made hereunder prior to the first day that is six months after the Date of Termination;

provided that the Specified Employee six-month delay under this Section 4(c)(i) shall be effective only to the extent that payment would constitute “nonqualified deferred compensation” under Section 409A of the Internal Revenue Code, as amended, and the regulations issued thereunder (“Section 409A”). Any lump sum payment that is subject to the Specified Employee six-month delay shall be paid within the first five business days after the expiration of such six-month delay. Any amount that is not “nonqualified deferred compensation” under Section 409A shall be paid within the first five business days after the Date of Termination. Notwithstanding any other provision of this Section 4(c)(i), any payment under paragraph (iii) of Section 4(a) shall not be paid before the later of (1) the first five business days after the Date of Termination, or (2) the expiration of the Specified Employee six-month delay, if applicable.

(ii)Not Specified Employee. If you are not a Specified Employee at the Date of Termination, the Company will pay the amounts described in Section 4(a) hereof within the first five business days following the Date of Termination.

(d)No Age or Service Credit. You shall not be entitled to any additional age or service credits under any of the Company’s employee benefit or retirement plans for any period after the Date of Termination of your employment.

5. Welfare Benefit Plans.

(a)If a Change in Control of the Company occurs and within two years thereafter your employment with the Company is terminated either by you for Good Reason or by the Company Without Cause, then, in all cases subject to Sections 5(b) and 5(c), the Company shall maintain in full force and effect, for the continued benefit of you and your dependents, medical-related employee benefit plans, programs and arrangements in which you were entitled to participate immediately prior to the Date of Termination for the lesser of (i) one-and-one-half (1½) years from the Date of Termination or (ii) that number of years equal to a fraction (A) the numerator of which is the number of months from and including the month in which the Date of Termination occurs to and including the month in which you would attain the age sixty-five and (B) the denominator of which is twelve; provided that your continued participation is possible under the general terms and provisions of such welfare plans, programs and arrangements. In the event that your participation in any such welfare plan, program or arrangement is barred, or any such plan, program or arrangement is discontinued or the benefits thereunder materially reduced, the Company shall arrange to provide you with benefits substantially similar to those which you were entitled to receive under such plans, programs and arrangements immediately prior to the Date of Termination.

(b)Notwithstanding the provisions of Section 5(a), to the extent that any welfare benefits involve reimbursements or in-kind benefits:

(i)The amount of expenses eligible for reimbursement and the provision of in-kind benefits during any calendar year shall not affect the amount of expenses eligible for reimbursement or the provision of in-kind benefits in any other calendar year;

(ii)The reimbursement of an eligible expense shall be made on or before December 31 of the calendar year following the calendar year in which the expense was incurred; and

(iii)The right to reimbursement or right to in-kind benefit shall not be subject to liquidation or exchange for another benefit.

(c)Notwithstanding the provisions of Section 5(a), if at the Date of Termination you are a Specified Employee, no benefits shall be provided hereunder prior to the first day that is six months after the Date of Termination; provided that the Specified Employee six-month delay under this Section 5(c) shall be effective only to the extent that benefits would constitute “nonqualified deferred compensation” under Section 409A. Any benefits subject to the Specified Employee six-month delay shall commence within the first five business days after the expiration of such six-month delay. Any benefits that are not “nonqualified deferred compensation” under Section 409A or not subject to the Specified Employee six-month delay shall commence within the first business day after the Date of Termination.

6. Outplacement Services. If a Change in Control of the Company occurs and within two years thereafter your employment with the Company is terminated either by you for Good Reason or by the Company Without Cause, then the Company shall provide you reasonable outplacement services for a period of up to one year of a nature customarily provided at your executive officer level.

7. No Mitigation Required. You shall not be required to mitigate the amount of any payment or benefit provided for in Section 4 or 5 by seeking other employment or otherwise. Notwithstanding the foregoing, benefits otherwise receivable under Section 5 of this Agreement shall be reduced to the extent that and for any period during which you receive substantially similar benefits from another employer.

8. Noncompetition, Nonsolicitation and Nondisparagement. If a Change in Control occurs and within two years thereafter your employment with the Company is terminated either by you for Good Reason or by the Company Without Cause, and you are receiving payments from the Company pursuant to this Agreement, then for a period of three years from the Date of Termination of your employment you agree that without the written consent of the Company, you will not, either directly or indirectly, (a) engage in, make any investment in, advise, assist or render any services to any person or entity in competition with the business of the Company or its subsidiaries, (b) solicit for employment or hire any individual who was employed by the Company or its subsidiaries at any time on or after that date which is six (6) months prior to the Date of Termination of your employment, or directly or indirectly, entice, solicit or seek to induce or influence any such individual to leave his or her employment, or (c) disparage the Company or its subsidiaries, or any of their respective directors, officers or associates, either publicly or privately, or otherwise make statements that cast any of the Company or its subsidiaries, or any of their respective directors, officers or associates, in an unfavorable light. Notwithstanding the foregoing, you may own less than one percent of the combined voting power of all issued and outstanding voting securities of any publicly held corporation whose stock is traded on a major stock exchange.

9. Confidential Information. You hereby agree that you shall not at any time (whether employed by the Company or not), either directly or indirectly, disclose or make known to any person or entity any confidential information, trade secret, or proprietary information that you acquired during the course of your employment with the Company which shall not have become public knowledge (other than by your actions in violation of this Agreement). You further agree that upon the termination of your employment with the Company or at any time upon the request of the Company you shall deliver to the Company any and all literature, documents, correspondence, and other materials and records furnished to or acquired by you from the Company during the course of your employment with the Company. In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise payable to you under this Agreement.

10. Security. To secure payment of the benefits herein provided for, the Company agrees to maintain in the Company’s name an irrevocable escrow account in the form of an unfunded rabbi trust (the “Escrow Account”) at a national bank that is (a) a legal business entity organized and doing business under the laws of the United States or any State thereof, in good standing, having an office in the State of Ohio, that is authorized under such laws to exercise corporate trust powers and that has at the time of its appointment a combined capital and surplus of at least One Billion Dollars ($1,000,000,000) or (b) an affiliate of a national bank described in clause (a) of this sentence (the “Bank”), and to keep on deposit in the Escrow Account cash, securities or property with a fair market value, if any, as shall at all times be at least equal to the required security hereinafter provided for. The maximum amount of required security to be kept on deposit at any time shall be (A) an amount equal to three times your annualized Base Compensation (defined as your annual base salary and your target annual incentive compensation (based on achievement of performance goals at the 100% level)), with such amount to be recalculated each November to reflect changes in your annualized Base Compensation, or (B) if there has been a determination with your written consent or by a final arbitral award rendered in accordance with this Agreement that a specific lesser amount fully secures the Company’s obligations under this Agreement, or that the Company has fully performed its obligations under this Agreement, then such specific lesser amount or, in the case that the Company has fully performed its obligations under this Agreement, nothing. The full maximum amount of required security shall be kept on deposit at all times after there shall have been a Change in Control. Unless and until such a Change in Control shall have occurred, however, the Company shall only be obliged to maintain on deposit in the Escrow Account 50% of the maximum amount of required security. Amounts deposited in the Escrow Account shall be paid out by the Bank only to you, in such amounts as the Company shall certify in good faith to the Bank as amounts that the Company is in default in paying to you under this Agreement, or to the Company, to the extent that the amount on deposit exceeds the maximum amount of required security as specified by the Company in good faith to the Bank or in a final settlement or judgment relating to this Agreement.

11. Successors, Binding Agreement. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession that constitutes a Change in Control shall be a breach of this Agreement and shall entitle you to compensation from the Company, upon a termination by you for Other Good Reason in accordance with Section 3(e)(B), in the same amount and on the same terms as you would be entitled hereunder under Section 4. As used in this Agreement “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 11 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amounts would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisees, legatees, or other designee or, if there be no such designee, to your estate within 90 days of your death; provided that where such 90-day period begins in one calendar year and ends in another calendar year, your devisees, legatees, other designee, or estate shall not be entitled to designate the taxable year of payment.

12. Continued Status as Elected Officer or Appointed Officer. Notwithstanding anything to the contrary elsewhere contained in this Agreement, if you cease to be a Board-elected officer or an appointed officer of the Company prior to a Change in Control, this Agreement shall be deemed terminated and of no further force and effect.

13. Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

14. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by you and such officer as may be specifically designated by the Board; provided, that the Company shall have the right to terminate its obligations to you under this Agreement by written notice given to you at any time prior to a Change in Control, so long as such termination is not done in anticipation of or in connection with a Change in Control. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement constitutes the entire agreement between the Company and you with respect to the subject matter hereof and, except to the extent a specific compensation program provides for benefits upon a Change in Control relative to that program, which provisions shall remain in effect, no agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. Without limiting the generality of the foregoing, this Agreement supersedes and replaces in its entirety any prior agreement relating to the subject matter hereof. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio, without giving effect to its conflict of laws provisions.

15. Validity. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

17. Jurisdiction. In the event of any dispute or controversy arising under or in connection with this Agreement, you and the Company hereby irrevocably consent to the jurisdiction of the Common Pleas Court of the State of Ohio (Cuyahoga County) or the United States District Court for the Northern District of Ohio.

18. Legal Fees and Expenses.

(a)It is the intent of the Company that you shall not be required to incur the expenses associated with the enforcement of your rights under this Agreement by arbitration, litigation, other legal action or negotiation to resolve any disputes because the cost and expenses thereof would substantially detract from the benefits intended to be extended to you hereunder.

Accordingly, if it should appear to you that the Company has failed to comply with any of its obligations under this Agreement or in the event the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any arbitration or litigation designed to deny, or to recover from, you the benefits intended to be provided to you hereunder, the Company irrevocably authorizes you from time to time to retain counsel of your choice, at the expense of the Company, to represent you in connection with the initiation or defense of any arbitration, litigation, other legal action or negotiation to resolve any disputes whether by or against the Company or any director, officer, shareholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to your entering into an attorney-client relationship with such counsel, and in that connection the Company and you agree that a confidential relationship shall exist between you and such counsel. The Company shall also pay or cause to be paid and shall be solely responsible for any and all attorneys’ and related fees and expenses incurred by you as a result of the Company’s failure to perform this Agreement or any provision hereof (including this Section 18) or as a result of the Company or any person contesting the validity or enforceability of this Agreement or any provision hereof.

(b)The payment or reimbursement of fees and expenses under this Section 18 shall be subject to the following conditions:

(i)You must incur any expense authorized by this Section 18 no later than three years after the Date of Termination;

(ii)The amount eligible for reimbursement and the provision of in-kind benefits during any calendar year shall not affect the amount eligible for reimbursement or the provision of in-kind benefits in any other calendar year;

(iii)The reimbursement of an eligible expense shall be made on or before December 31 of the calendar year following the calendar year in which the expense was incurred; and

(iv)The right to reimbursement or right to in-kind benefit shall not be subject to liquidation or exchange for another benefit.

(c)Notwithstanding the provisions of this Section 18, if at the Date of Termination you are a Specified Employee, no payment or reimbursement shall be provided under Section 18 prior to the first day that is six months after the Date of Termination; provided that the Specified Employee six-month delay under this Section 18 shall be effective only to the extent that payment or reimbursement would constitute “nonqualified deferred compensation” under Section 409A. Any payment or reimbursement otherwise due under this Section 18 and subject to the Specified Employee six-month delay shall commence within the first five business days after the expiration of such six-month delay. Any payment or reimbursement that is not “nonqualified deferred compensation” under Section 409A or not subject to the Specified Employee six-month delay shall be paid or reimbursed as otherwise provided herein.

19. Non‑Alienation. No benefit under this Agreement shall at any time be subject in any manner to alienation or encumbrance. If you attempt to, or shall, alienate or in any way encumber your rights or benefits under the Agreement, or any part thereof, or if by reason of his bankruptcy or other event happening at any time any such benefits would otherwise be received by anyone else or would not be enjoyed by you, your interest in all such benefits shall automatically terminate and the same shall be held

or applied to or for the benefit of such person, his spouse, children, or other dependents as the Company may select.

20. Taxes. The Company (or any agent of the Company) shall report all income required to be reported, and withhold from any payment under the Agreement the amount of withholding taxes due, in the opinion of the Company, in respect of such income or payment and shall take any other action as may be necessary, in the opinion of the Company, to satisfy all obligations for the reporting of such income and payment of such taxes. Except as specifically provided herein, the Company shall not be held liable for any taxes, penalties, interest, or other monetary amounts owed by a Participant or other person, including any taxes, penalties, and/or interest under Section 409A, as a result of the payment or deferral of any amounts under the Agreement. Although the Company shall use its best efforts to avoid the imposition of taxation, penalties, and/or interest under Section 409A, tax treatment of payment under this Agreement is not warranted or guaranteed.

21. This Agreement is intended to be treated as an unfunded deferred compensation arrangement under the Code. The obligation of the Company shall constitute the unsecured promise of the Company to make payments as provided herein, and no person shall have any interest in, or a lien or prior claim upon, any property of the Company.

[The balance of this page has been left blank intentionally]

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of the letter which will then constitute our agreement on this subject.

	Very truly yours,
	APPLIED INDUSTRIAL TECHNOLOGIES, INC.
	By:____________________________________
	Date: ____________________________
ACCEPTED AND AGREED TO:
________________________________________

EX-10.2

EXHIBIT 10.2

Schedule of Key Executive Restoration Plan Participants

Current executive officer

Neil A. Schrimsher

Thomas E. Armold

Todd A. Barlett

Fred D. Bauer

Mark O. Eisele

Kurt W. Loring

Carl E. Will

The Executive Organization & Compensation Committee has set:

• the Company Contribution Percentage for Mr. Schrimsher at 10%, and for Mr. Will at 8%, and

• Mr. Schrimsher and Mr. Will each will vest in 50% of their account after three years of service, 75% after four years of service and 100% after five years of service.

EX-15

EXHIBIT 15

November 4, 2014

Applied Industrial Technologies, Inc.

One Applied Plaza

Euclid Avenue at East 36th Street

Cleveland, Ohio 44115

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of Applied Industrial Technologies, Inc. and subsidiaries for the periods ended September 30, 2014 and 2013, as indicated in our report dated November 4, 2014; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, is incorporated by reference in Registration Statement Nos. 33-53401, 33-53361, 33-65509, 333-83809, 333-69002, 333-124574, 333-138053, 333-138054, 333-149183, and 333-179354 on Forms S-8.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche LLP

Cleveland, Ohio

EX-18

EXHIBIT 18

November 4, 2014

Applied Industrial Technologies, Inc.

1 Applied Plaza

Cleveland, OH 44115

Dear Sirs/Madams:

At your request, we have read the description included in your Quarterly Report on Form 10-Q to the Securities and Exchange Commission for the quarter ended September 30, 2014, of the facts relating to the change in accounting principle to use weighted average cost instead of current cost to determine current period LIFO indices as well as the cost of any new LIFO layers for the inventory at its U.S. service centers that implemented a new ERP (SAP) system. We believe, on the basis of the facts so set forth and other information furnished to us by appropriate officials of the Company, that the accounting change described in your Form 10-Q is to an alternative accounting principle that is preferable under the circumstances.

We have not audited any consolidated financial statements of Applied Industrial Technologies, Inc. and its consolidated subsidiaries as of any date or for any period subsequent to June 30, 2014. Therefore, we are unable to express, and we do not express, an opinion on the facts set forth in the above-mentioned Form 10-Q, on the related information furnished to us by officials of the Company, or on the financial position, results of operations, or cash flows of Applied Industrial Technologies, Inc. and its consolidated subsidiaries as of any date or for any period subsequent to June 30, 2014.

Yours truly,

/s/ Deloitte & Touche LLP         

Cleveland, Ohio

November 4, 2014

EX-31

EXHIBIT 31

Certifications of Disclosure in Quarterly Report on Form 10-Q

I, Neil A. Schrimsher, President & Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Applied Industrial Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2014	By: /s/ Neil A. Schrimsher
	Neil A. Schrimsher
	President & Chief Executive Officer

I, Mark O. Eisele, Vice President-Chief Financial Officer & Treasurer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Applied Industrial Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 4, 2014	By: /s/ Mark O. Eisele
	Mark O. Eisele
	Vice President-Chief Financial Officer & Treasurer

EX-32

EXHIBIT 32

[The following certification accompanies Applied Industrial Technologies'

Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, and is not filed, as provided in applicable SEC releases.]

Certification of Principal Executive Officer and

Principal Financial Officer Pursuant to

18 U.S.C. 1350

In connection with the Form 10-Q (the “Report”) of Applied Industrial Technologies, Inc.    (the “Company”) for the period ending September 30, 2014, we, Neil A. Schrimsher, President & Chief Executive Officer, and Mark O. Eisele, Vice President-Chief Financial Officer & Treasurer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Neil A. Schrimsher	/s/ Mark O. Eisele
Neil A. Schrimsher	Mark O. Eisele
President & Chief Executive Officer	Vice President-Chief Financial Officer & Treasurer
Date: November 4, 2014

[A signed original of this written statement required by Section 906 has been provided to Applied Industrial Technologies, Inc. and will be retained by Applied Industrial Technologies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.]

XML

Benefit Plans (Details Textuals) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014
Pension Plans, Defined Benefit [Member]
Benefit Plans (Textuals) [Abstract]
Contribution to benefit plan	$ 5,832
Expected contribution to benefit plans for remainder of fiscal year	570
Retiree Health Care Benefits [Member]
Benefit Plans (Textuals) [Abstract]
Contribution to benefit plan	40
Expected contribution to benefit plans for remainder of fiscal year	$ 120

XML

Debt (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Sep. 30, 2014 Revolving Credit Facility [Member]	Jun. 30, 2014 Revolving Credit Facility [Member]	Sep. 30, 2014 Minimum [Member] Revolving Credit Facility [Member]	Sep. 30, 2014 Maximum [Member] Revolving Credit Facility [Member]	Sep. 30, 2014 Prudential Facility [Domain]	Jul. 01, 2014 Prudential Facility [Domain]	Sep. 30, 2014 Prudential Facility - Series C [Member]	Sep. 30, 2014 State of Ohio Assumed Debt [Member]	Sep. 30, 2014 Term Loan [Member]	Jun. 30, 2014 Term Loan [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 150,000
Line of Credit Facility, Commitment Fee Percentage			0.09%	0.175%
Line of Credit Facility, Amount Outstanding	103,000	69,000
Letters of Credit Outstanding, Amount	8,900	8,700
Line of Credit Facility, Remaining Borrowing Capacity	38,100	72,300
Debt, Weighted Average Interest Rate	0.85%
Debt Instrument, Face Amount								2,400	100,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate						3.19%	3.19%	1.50%	1.06%
Long-term Debt					120,000	120,000		2,300	98,800	99,400
Debt Instrument, Unused Borrowing Capacity, Amount					$ 5,000

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Basis of Presentation Change in Accounting Principle (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income	$ 0	$ 1,167
Net Sales Impact [Member] [Member]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income	$ 1,200

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Segment and Geographic Information (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Net sales are presented in geographic areas
Net Sales	$ 702,325	$ 605,305
United States
Net sales are presented in geographic areas
Net Sales	561,559	501,051
Canada
Net sales are presented in geographic areas
Net Sales	99,181	69,747
Other countries
Net sales are presented in geographic areas
Net Sales	$ 41,585	$ 34,507

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Shareholders' Equity Shareholders Equity Details Textuals (Details) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement of Stockholders' Equity [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	239	272

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Goodwill and Intangibles

3 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLES

GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Fluid Power Businesses segment for the three month period ended September 30, 2014 are as follows:

	Service Centers			Fluid Power		Total
Balance at July 1, 2014	$	192,565		$	929	$	193,494
Goodwill acquired during the period	71,361			—		71,361
Other, primarily currency translation	(5,699		)	—		(5,699		)
Balance at September 30, 2014	$	258,227		$	929	$	259,156

At September 30, 2014, accumulated goodwill impairment losses, subsequent to fiscal year 2002, totaled $36,605 and related to the Fluid Power Businesses segment.

The Company’s identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:

September 30, 2014	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	217,668	$	52,751	$	164,917
Trade names	43,316		11,153		32,163
Vendor relationships	15,144		6,793		8,351
Non-competition agreements	4,528		1,462		3,066
Total Identifiable Intangibles	$	280,656	$	72,159	$	208,497

June 30, 2014	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	170,395	$	48,285	$	122,110
Trade names	36,912		10,394		26,518
Vendor relationships	15,446		6,628		8,818
Non-competition agreements	3,322		1,260		2,062
Total Identifiable Intangibles	$	226,075	$	66,567	$	159,508

Amounts include the impact of foreign currency translation. Fully amortized amounts are written off.

During the three month period ended September 30, 2014, the Company acquired identifiable intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:

	Acquisition Cost Allocation		Weighted-Average Life
Customer relationships	$	51,494	20
Trade names	6,928		5
Vendor relationships	9		5
Non-competition agreements	1,300		5
Total Intangibles Acquired	$	59,731	18

Estimated future amortization expense by fiscal year (based on the Company’s identifiable intangible assets as of September 30, 2014) for the next five years is as follows: $19,800 for the remainder of 2015, $24,500 for 2016, $23,100 for 2017, $21,000 for 2018, $19,200 for 2019 and $16,300 for 2020.

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Segment and Geographic Information (Details Textuals) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Segment and Geographic Information (Textuals) [Abstract]
Sales primarily from businesses segment	$ 5,573	$ 5,533

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Goodwill and Intangibles (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014
Changes in the carrying amount of goodwill by reportable segment
Balance at July 1, 2014	$ 193,494
Goodwill acquired during the period	71,361
Other, primarily currency translation	(5,699)
Balance at September 30, 2014	259,156
Service Center Based Distribution Segment [Member]
Changes in the carrying amount of goodwill by reportable segment
Balance at July 1, 2014	192,565
Goodwill acquired during the period	71,361
Other, primarily currency translation	(5,699)
Balance at September 30, 2014	258,227
Fluid Power Businesses Segment [Member]
Changes in the carrying amount of goodwill by reportable segment
Balance at July 1, 2014	929
Goodwill acquired during the period	0
Other, primarily currency translation	0
Balance at September 30, 2014	$ 929

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Business Combinations Pro - Forma Information (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 30, 2013
Business Combinations [Abstract]
Sales	$ 663,010
Operating income	44,746
Net income	$ 29,089
Diluted net income per share	$ 0.68

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Other (Income) Expense, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Other Income and Expenses [Abstract]
Unrealized (gain) loss on assets held in rabbi trust for a nonqualified deferred compensation plan	$ 91	$ (596)
Elimination of one-month Canadian reporting lag, effective July 1, 2013	0	(1,167)
Foreign currency transactions (gain) loss	54	605
Other, net	99	67
Total other (income) expense, net	$ 244	$ (1,091)

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Goodwill and Intangibles (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Amortization details resulting from business combinations
Amount	$ 280,656	$ 226,075
Accumulated Amortization	72,159	66,567
Net Book Value	208,497	159,508
Total Identifiable Intangible	208,497	159,508
Customer relationships
Amortization details resulting from business combinations
Amount	217,668	170,395
Accumulated Amortization	52,751	48,285
Net Book Value	164,917	122,110
Trade names
Amortization details resulting from business combinations
Amount	43,316	36,912
Accumulated Amortization	11,153	10,394
Net Book Value	32,163	26,518
Vendor relationships
Amortization details resulting from business combinations
Amount	15,144	15,446
Accumulated Amortization	6,793	6,628
Net Book Value	8,351	8,818
Non-competition agreements
Amortization details resulting from business combinations
Amount	4,528	3,322
Accumulated Amortization	1,462	1,260
Net Book Value	$ 3,066	$ 2,062

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Goodwill and Intangibles Goodwill and Intangibles (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	$ 59,731
Weighted-Average Life	18 years
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	51,494
Weighted-Average Life	20 years
Trade Names [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	6,928
Weighted-Average Life	5 years
Vendor Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	9
Weighted-Average Life	5 years
Noncompete Agreements [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquisition Cost Allocation	$ 1,300
Weighted-Average Life	5 years

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Business Combinations

3 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

BUSINESS COMBINATIONS

The operating results of all acquired entities are included within the consolidated operating results of the Company from the date of each respective acquisition.

Fiscal 2015

On July 1, 2014, the Company acquired 100% of the outstanding stock of Knox Oil Field Supply Inc. (“Knox”), headquartered in San Angelo, Texas, for total consideration of $132,000, including cash paid of $118,000 at closing. The primary reason for the acquisition of Knox is to complement and expand the Company’s capabilities to serve the upstream oil and gas industry in the United States. As a distributor of oilfield supplies and related services, this business will be included in the Service Center Based Distribution Segment. The Company funded the acquisition by drawing $120,000 from the previously uncommitted shelf facility with Prudential Investment Management at a fixed interest rate of 3.19% with an average seven year life. The remaining $14,000 purchase price will be paid as acquisition holdback payments on the first three anniversaries of the acquisition with interest at a fixed rate of 1.5%.

The following table summarizes the consideration transferred, assets acquired, and liabilities assumed in connection with the acquisition of Knox based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment:

	Knox Acquisition
Accounts receivable	$	20,100
Inventories	18,900
Property	3,600
Identifiable intangible assets	58,500
Goodwill	70,500
Total assets acquired	171,600
Accounts payable and accrued liabilities	10,300
Deferred income taxes	29,300
Net assets acquired	$	132,000
Purchase price	132,800
Reconciliation of fair value transferred:
Working Capital Adjustments	(800		)
Total Consideration	$	132,000

None of the goodwill acquired is expected to be deductible for income tax purposes. The goodwill recognized is attributable primarily to expected synergies and other benefits that the Company believes will result from the acquisition of Knox.

Also on July 1, 2014, the Company acquired substantially all of the net assets of Rodamientos y Derivados del Norte S.A. de C.V., a Mexican distributor of bearings and power transmission products and related products, and Great Southern Bearings / Northam Bearings, a Western Australia distributor of bearings and power transmission products for combined consideration of approximately $12,600. Tangible assets acquired was $10,400 and intangibles including goodwill was $2,200, based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment. The Company funded these acquisitions from borrowings under the revolving credit facility. Total acquisition holdback payments of $1,600 will be paid in equal increments on the following three anniversaries of the acquisition. The results of operations for the Mexican and Australian acquisitions are not material for any period presented.

Fiscal 2014

On May 1, 2014, the Company acquired 100% of the outstanding stock of Reliance Industrial Products (“Reliance”), headquartered in Nisku, Alberta, Canada, with operations in Western Canada and the Western United States, for total consideration in the amount of $179,800; tangible assets acquired was $27,500 and intangibles including goodwill was $152,300, based upon preliminary estimated fair values at the acquisition date, which are subject to adjustment. The primary reason for the acquisition is to provide the Company enhanced capabilities to serve the upstream oil and gas industry in the United States and Canada. A distributor of fluid conveyance and oilfield supplies, this business is included in the Service Center Based Distribution Segment. The Company funded the acquisition by using available cash in Canada in the amount of $31,900, existing revolving credit facilities of $36,600 and a new $100,000 five year term loan facility, with the remainder of $20,000 to be paid in equal amounts as acquisition holdback payments on the first two anniversaries of the acquisition, plus interest at 2% per annum.

During December 2013, the Company acquired substantially all of the net assets of Texas Oilpatch Services Corporation (Tops), a Texas distributor of bearings, oil seals, power transmission products, and related replacement parts to the oilfield industry. The acquired business is included in the Service Center Based Distribution segment. The consideration paid for this acquisition was $17,000, tangible assets acquired was $3,900 and intangibles, including goodwill was $13,100. The purchase price includes $2,550 of acquisition holdback payments which have been paid into an escrow account controlled by a third party. The acquisition price and the results of operations of Tops are not material in relation to the Company’s consolidated financial statements.

Pro Forma Financial Information

The following unaudited pro forma consolidated results of operations have been prepared as if the Reliance and Knox acquisitions (including the related acquisition costs) had occurred at the beginning of the first quarter of fiscal 2014:

Pro forma, three months ended September 30:	2013
Sales	$	663,010
Operating income	$	44,746
Net income	$	29,089
Diluted net income per share	$	0.68

These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect additional depreciation and amortization assuming the fair value adjustments to property, plant, and equipment, and amortizable intangible assets had been applied as of July 1, 2013. In addition, pro forma adjustments have been made for the interest expense that would have been incurred as a result of the indebtedness used to finance the acquisitions. The pro forma net income amounts also incorporate an adjustment to the recorded income tax expense for the income tax effect of the pro forma adjustments described above. These pro forma results of operations do not include any anticipated synergies or other effects of the planned integrations; accordingly, such pro forma adjustments do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred as the date indicated or that may result in the future.

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Goodwill and Intangibles (Details Textuals) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Goodwill and Intangibles (Textuals) [Abstract]
Amortization expense for the remainder of 2015	$ 19,800
Amortization expense for 2016	24,500
Amortization expense for 2017	23,100
Amortization expense for 2018	21,000
Amortization expense for 2019	19,200
Amortization expense for 2020	16,300
Fluid Power Businesses [Member]
Goodwill [Line Items]
Accumulated goodwill impairment losses	$ 36,605

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Segment and Geographic Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
Segment financial information
Net sales	$ 702,325	$ 605,305
Operating income for reportable segments	46,165	39,539
Assets used in business	1,468,919		1,334,169
Depreciation and amortization of property	4,211	3,431
Capital expenditures	3,100	1,571
Operating Segments [Member]
Segment financial information
Operating income for reportable segments	50,468	37,829
Service Center Based Distribution [Member]
Segment financial information
Net sales	575,097	492,072
Operating income for reportable segments	37,535	28,372
Assets used in business	1,251,565	841,770
Depreciation and amortization of property	3,843	2,999
Capital expenditures	2,738	1,394
Fluid Power Businesses [Member]
Segment financial information
Net sales	127,228	113,233
Operating income for reportable segments	12,933	9,457
Assets used in business	217,354	208,319
Depreciation and amortization of property	368	432
Capital expenditures	362	177
Reportable Subsegments [Member]
Segment financial information
Assets used in business	$ 1,468,919	$ 1,050,089

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Condensed Statements of Consolidated Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Net Sales	$ 702,325	$ 605,305
Cost of Sales	507,393	435,510
Gross Profit	194,932	169,795
Selling, Distribution and Administrative, including depreciation	148,767	130,256
Operating Income	46,165	39,539
Interest (Income) Expense, net	1,662	61
Other (Income) Expense, net	244	(1,091)
Income Before Income Taxes	44,259	40,569
Income Tax Expense	15,137	13,725
Net Income	$ 29,122	$ 26,844
Net Income Per Share - Basic	$ 0.70	$ 0.64
Net Income Per Share - Diluted	$ 0.70	$ 0.63
Cash dividends per common share	$ 0.25	$ 0.23
Weighted average common shares outstanding for basic computation	41,467	42,157
Dilutive effect of potential common shares	362	480
Weighted average common shares outstanding for diluted computation	41,829	42,637

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Subsequent Events (Details) (Subsequent Event [Member], USD $) In Thousands, unless otherwise specified	1 Months Ended
	Nov. 03, 2014
Prudential Facility [Domain]
Subsequent Event [Line Items]
Increase in Borrowing Capacity	$ 100,000
Debt Instrument, Unused Borrowing Capacity, Amount	50,000
Prudential Facility - Series D [Domain]
Subsequent Event [Line Items]
Debt Instrument, Increase (Decrease), Net	$ 50,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	3.21%

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Condensed Statements of Consolidated Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash Flows from Operating Activities
Net income	$ 29,122	$ 26,844
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property	4,211	3,431
Amortization of intangibles	6,491	3,249
Unrealized foreign exchange transactions (gain) loss	(572)	(291)
Amortization of stock options and appreciation rights	577	636
(Gain) loss on sale of property	(5)	35
Other share-based compensation expense	592	754
Changes in operating assets and liabilities, net of acquisitions	(58,891)	(18,014)
Other, net	374	312
Net Cash (used in) provided by Operating Activities	(18,101)	16,956
Cash Flows from Investing Activities
Property purchases	(3,100)	(1,571)
Proceeds from property sales	3	183
Acquisition of businesses, net of cash acquired	(129,810)	0
Net Cash used in Investing Activities	(132,907)	(1,388)
Cash Flows from Financing Activities
Borrowings under revolving credit facility	34,000	0
Long-term debt borrowings	120,238	0
Long-term debt repayments	(690)	0
Purchases of treasury shares	(10,400)	(3,001)
Dividends paid	(10,402)	(9,746)
Excess tax benefits from share-based compensation	556	1,516
Acquisition holdback payments	0	(606)
Net Cash provided by (used in) Financing Activities	133,302	(11,837)
Effect of Exchange Rate Changes on Cash	(1,450)	(18)
(Decrease) Increase in Cash and Cash Equivalents	(19,156)	3,713
Cash and Cash Equivalents at Beginning of Period	71,189	73,164
Cash and Cash Equivalents at End of Period	$ 52,033	$ 76,877

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Shareholders' Equity Accumulated Other Comprehensive Income (Loss) [Table] (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	$ (1,615)
Other Comprehensive Income (Loss), Unrealized gain (loss) on securities available for sale	(27)	23
Net current-period other comprehensive income (loss), net of taxes, Foreign Currency Translation Adjustment	(19,105)	550
Net current-period other comprehensive income (loss), net of taxes, Total accumulated other comprehensive income (loss)	(19,088)	631
Balance at September 30, 2014	(20,703)
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	989
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment	(19,105)
Amounts reclassified from accumulated other comprehensive income (loss)	0
Net current-period other comprehensive income (loss), net of taxes, Foreign Currency Translation Adjustment	(19,105)
Balance at September 30, 2014	(18,116)
Postemployment benefits [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	(2,625)
Other Comprehensive Income (Loss), Postemployment Benefits,
Amounts reclassified from accumulated other comprehensive income (loss)	44
Net current-period other comprehensive income (loss), net of taxes, Postemployment benefits	44
Balance at September 30, 2014	(2,581)
Unrealized gain (loss) on securities available for sale [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	21
Other Comprehensive Income (Loss), Unrealized gain (loss) on securities available for sale	(27)
Amounts reclassified from accumulated other comprehensive income (loss)	0
Net current-period other comprehensive income (loss), net of taxes, Unrealized gain (loss) on securities available for sale	(27)
Balance at September 30, 2014	(6)
Total Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at beginning of period	(1,615)
Other Comprehensive Income (Loss), Total accumulated other comprehensive income (loss)	(19,132)
Amounts reclassified from accumulated other comprehensive income (loss)	44
Net current-period other comprehensive income (loss), net of taxes, Total accumulated other comprehensive income (loss)	(19,088)
Balance at September 30, 2014	$ (20,703)

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Benefit Plans (Tables)

3 Months Ended

Sep. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Net periodic costs

The following table provides summary disclosures of the net periodic postemployment costs recognized for the Company’s postemployment benefit plans:

	Pension Benefits						Retiree Health Care Benefits
Three Months Ended September 30,	2014			2013			2014			2013
Components of net periodic cost:
Service cost	$	24		$	19		$	13		$	12
Interest cost	224			295			24			35
Expected return on plan assets	(124		)	(104		)	—			—
Recognized net actuarial (gain) loss	140			153			(22		)	(9		)
Amortization of prior service cost	22			20			(68		)	(68		)
Net periodic cost	$	286		$	383		$	(53	)	$	(30	)

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Shareholders' Equity (Details 1 ) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Other comprehensive income (loss):
Foreign currency translation adjustments, before Tax	$ (19,105)	$ 550
Foreign currency translation adjustments, Tax		0
Foreign currency translation adjustments, Net of Tax	(19,105)	550
Postemployment benefits:
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs, before Tax	72	95
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs, Tax	28	37
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs, Net Of Tax	44	58
Unrealized gain (loss) on investment securities available for sale, before Tax	(41)	34
Unrealized gain (loss) on investment securities available for sale, Tax	(14)	11
Unrealized gain (loss) on investment securities available for sale, Net of Tax	(27)	23
Other comprehensive income (loss), before tax	(19,074)	679
Other comprehensive income (loss), Tax	14	48
Other comprehensive income (loss), net of tax	$ (19,088)	$ 631

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Other (Income) Expense, Net (Tables)

3 Months Ended

Sep. 30, 2014

Other Income and Expenses [Abstract]

Other expense (income), net

Other (income) expense, net consists of the following:

	Three Months Ended
	September 30,
	2014		2013
Unrealized (gain) loss on assets held in rabbi trust for a nonqualified deferred compensation plan	$	91	$	(596	)
Elimination of one-month Canadian reporting lag, effective July 1, 2013	—		(1,167		)
Foreign currency transactions (gain) loss	54		605
Other, net	99		67
Total other (income) expense, net	$	244	$	(1,091	)

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Basis of Presentation

3 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position of Applied Industrial Technologies, Inc. (the “Company”, or “Applied”) as of September 30, 2014, and the results of its operations and its cash flows for the three month periods ended September 30, 2014 and 2013, have been included. The condensed consolidated balance sheet as of June 30, 2014 has been derived from the audited consolidated financial statements at that date. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2014.

Operating results for the three month period ended September 30, 2014 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending June 30, 2015.

Change in Accounting Principle - U.S. Inventory Costing Methodology

Over the past eight quarters, the Company has been implementing SAP as its new Enterprise Resource Planning system (ERP) at its U.S. service centers. As implementation occurred at each service center, the method used to apply the link chain dollar value last-in first-out (LIFO) method of accounting changed for the inventories at that location. The new inventory costing methodology utilizes the weighted average cost method to determine the current year LIFO indices as well as any new LIFO layers established, whereas previously, current costs were used. Upon completion of the implementation, on July 1, 2014 the Company changed its accounting policy to the new method. Differences between amounts recognized in the financial statements during the implementation period and the previous accounting policy prior to July 1, 2014 were immaterial.

The Company believes that this change in accounting principle is preferable under the circumstances because weighted average cost will provide a better reflection of actual transactions and inventory purchases resulting in improved matching of actual costs and current revenues, will result in greater consistency in inventory costing across the organization as certain other U.S. locations were previously using weighted average cost for similar LIFO calculations in their legacy inventory systems, and the new ERP system will make inventory costing a more efficient process within the U.S. ASC 250, Accounting Changes and Error Corrections, requires that unless it is impracticable to do so, the voluntary adoption of a new accounting principle should be done retrospectively to all prior periods. Before July 1, 2014, the Company’s former ERP system did not capture weighted average costs within the U.S. and the data needed to recalculate previous LIFO indices does not exist. Thus, the Company has concluded it is impracticable to recognize a cumulative effect or to retrospectively apply the effect of this change in accounting principle prior to July 1, 2014, but believes that those effects would be immaterial in all periods.

Change in Accounting Principle - Alignment of Canadian Subsidiary Reporting

Effective July 1, 2013, the Company aligned the consolidation of the Company’s Canadian subsidiary in the consolidated financial statements which previously included results on a one month reporting lag. The Company believes that this change in accounting principle is preferable as it provides contemporaneous reporting within our consolidated financial statements. In accordance with applicable accounting literature, the elimination of a one month reporting lag of a subsidiary is treated as a change in accounting principle and requires retrospective application. The Company has determined that the effect of this change is not material to the financial statements for all periods presented and therefore, the Company has not presented retrospective application of this change. The net impact of the lag elimination of $1,200 of income for the month of June 2013 has been included within “Other (Income) Expense, net” on the Statement of Consolidated Income for the first quarter of fiscal 2014. The three months ended September 30, 2013 reflect the same results, had the financial statements been retrospectively adjusted, with the exception of net income which would have decreased $1,200.

Inventory

The Company uses the last-in, first-out (LIFO) method of valuing U.S. inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination.

New Accounting Pronouncements

In May 2014, the FASB issued its final standard on the recognition of revenue from contracts with customers. The standard, issued as Accounting Standards Update (ASU) 2014-09, outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of this model is that "an entity recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services." The update is effective for financial statement periods beginning after December 15, 2016, with early adoption prohibited. The Company is currently determining the impact of this pronouncement on its financial statements and related disclosures.

In June 2014, the FASB issued its final standard on accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard, issued as (ASU) 2014-12, clarifies that a performance target that affects vesting and that can be achieved after the requisite service period, should be treated as a performance condition. The update is effective for financial statement periods beginning after December 15, 2015, with early adoption permitted. The Company is currently determining the impact of this pronouncement on its financial statements and related disclosures.

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Condensed Statements of Consolidated Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Net income per the condensed statements of consolidated income	$ 29,122	$ 26,844
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(19,105)	550
Postemployment benefits:
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	72	95
Unrealized gain (loss) on investment securities available for sale	(41)	34
Total of other comprehensive income (loss), before tax	(19,074)	679
Income tax expense related to items of other comprehensive income	14	48
Other comprehensive income (loss), net of tax	(19,088)	631
Comprehensive income, net of tax	$ 10,034	$ 27,475

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Basis of Presentation (Policies)

3 Months Ended

Sep. 30, 2014

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Change in Accounting Principle - U.S. Inventory Costing Methodology

Over the past eight quarters, the Company has been implementing SAP as its new Enterprise Resource Planning system (ERP) at its U.S. service centers. As implementation occurred at each service center, the method used to apply the link chain dollar value last-in first-out (LIFO) method of accounting changed for the inventories at that location. The new inventory costing methodology utilizes the weighted average cost method to determine the current year LIFO indices as well as any new LIFO layers established, whereas previously, current costs were used. Upon completion of the implementation, on July 1, 2014 the Company changed its accounting policy to the new method. Differences between amounts recognized in the financial statements during the implementation period and the previous accounting policy prior to July 1, 2014 were immaterial.

The Company believes that this change in accounting principle is preferable under the circumstances because weighted average cost will provide a better reflection of actual transactions and inventory purchases resulting in improved matching of actual costs and current revenues, will result in greater consistency in inventory costing across the organization as certain other U.S. locations were previously using weighted average cost for similar LIFO calculations in their legacy inventory systems, and the new ERP system will make inventory costing a more efficient process within the U.S. ASC 250, Accounting Changes and Error Corrections, requires that unless it is impracticable to do so, the voluntary adoption of a new accounting principle should be done retrospectively to all prior periods. Before July 1, 2014, the Company’s former ERP system did not capture weighted average costs within the U.S. and the data needed to recalculate previous LIFO indices does not exist. Thus, the Company has concluded it is impracticable to recognize a cumulative effect or to retrospectively apply the effect of this change in accounting principle prior to July 1, 2014, but believes that those effects would be immaterial in all periods.

Change in Accounting Principle - Alignment of Canadian Subsidiary Reporting

Effective July 1, 2013, the Company aligned the consolidation of the Company’s Canadian subsidiary in the consolidated financial statements which previously included results on a one month reporting lag. The Company believes that this change in accounting principle is preferable as it provides contemporaneous reporting within our consolidated financial statements. In accordance with applicable accounting literature, the elimination of a one month reporting lag of a subsidiary is treated as a change in accounting principle and requires retrospective application. The Company has determined that the effect of this change is not material to the financial statements for all periods presented and therefore, the Company has not presented retrospective application of this change. The net impact of the lag elimination of $1,200 of income for the month of June 2013 has been included within “Other (Income) Expense, net” on the Statement of Consolidated Income for the first quarter of fiscal 2014. The three months ended September 30, 2013 reflect the same results, had the financial statements been retrospectively adjusted, with the exception of net income which would have decreased $1,200.

Inventory, Policy [Policy Text Block]

Inventory

The Company uses the last-in, first-out (LIFO) method of valuing U.S. inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination.

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

New Accounting Pronouncements

In May 2014, the FASB issued its final standard on the recognition of revenue from contracts with customers. The standard, issued as Accounting Standards Update (ASU) 2014-09, outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of this model is that "an entity recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services." The update is effective for financial statement periods beginning after December 15, 2016, with early adoption prohibited. The Company is currently determining the impact of this pronouncement on its financial statements and related disclosures.

In June 2014, the FASB issued its final standard on accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard, issued as (ASU) 2014-12, clarifies that a performance target that affects vesting and that can be achieved after the requisite service period, should be treated as a performance condition. The update is effective for financial statement periods beginning after December 15, 2015, with early adoption permitted. The Company is currently determining the impact of this pronouncement on its financial statements and related disclosures.

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Document and Entity Information	3 Months Ended
	Sep. 30, 2014	Oct. 15, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	APPLIED INDUSTRIAL TECHNOLOGIES INC
Entity Central Index Key	0000109563
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		41,280,636

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Business Combinations Business Combinations Assets Acquired Table (Tables)

3 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table summarizes the consideration transferred, assets acquired, and liabilities assumed in connection with the acquisition of Knox based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment:

	Knox Acquisition
Accounts receivable	$	20,100
Inventories	18,900
Property	3,600
Identifiable intangible assets	58,500
Goodwill	70,500
Total assets acquired	171,600
Accounts payable and accrued liabilities	10,300
Deferred income taxes	29,300
Net assets acquired	$	132,000
Purchase price	132,800
Reconciliation of fair value transferred:
Working Capital Adjustments	(800		)
Total Consideration	$	132,000

None of the goodwill acquired is expected to be deductible for income tax purposes. The goodwill recognized is attributable primarily to expected synergies and other benefits that the Company believes will result from the acquisition of Knox.

The following table summarizes the consideration transferred, assets acquired, and liabilities assumed in connection with the acquisition of Knox based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment:

	Knox Acquisition
Accounts receivable	$	20,100
Inventories	18,900
Property	3,600
Identifiable intangible assets	58,500
Goodwill	70,500
Total assets acquired	171,600
Accounts payable and accrued liabilities	10,300
Deferred income taxes	29,300
Net assets acquired	$	132,000
Purchase price	132,800
Reconciliation of fair value transferred:
Working Capital Adjustments	(800		)
Total Consideration	$	132,000

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Current assets
Cash and cash equivalents	$ 52,033	$ 71,189
Accounts receivable, less allowances of $10,513 and $10,385	403,521	375,732
Inventories	367,291	335,747
Other current assets	51,915	53,480
Total current assets	874,760	836,148
Property, less accumulated depreciation of $160,063 and $156,872	106,683	103,596
Identifiable Intangibles, net	208,497	159,508
Goodwill	259,156	193,494
Deferred tax assets	260	21,166
Other assets	19,563	20,257
TOTAL ASSETS	1,468,919	1,334,169
Current liabilities
Accounts payable	145,614	172,401
Current portion of long term debt	2,842	2,720
Compensation and related benefits	47,687	55,760
Other current liabilities	75,839	60,074
Total current liabilities	271,982	290,955
Long-term debt	321,418	167,992
Postemployment benefits	19,073	23,611
Other liabilities	65,741	51,303
TOTAL LIABILITIES	678,214	533,861
Shareholders’ Equity
Preferred stock—no par value; 2,500 shares authorized; none issued or outstanding	0	0
Common stock—no par value; 80,000 shares authorized; 54,213 shares issued	10,000	10,000
Additional paid-in capital	158,001	156,999
Retained Earnings	915,482	896,776
Treasury shares—at cost (12,825 and 12,650 shares)	(272,075)	(261,852)
Accumulated other comprehensive income (loss)	(20,703)	(1,615)
TOTAL SHAREHOLDERS’ EQUITY	790,705	800,308
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,468,919	$ 1,334,169

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Shareholders' Equity

3 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

Accumulated Other Comprehensive Income (Loss)

Changes in the accumulated other comprehensive income (loss), are comprised of the following:

	Three Months Ended September 30, 2014
	Foreign currency translation adjustment			Unrealized gain (loss) on securities available for sale			Postemployment benefits			Total Accumulated other comprehensive income (loss)
Balance at July 1, 2014	$	989		$	21		$	(2,625	)	$	(1,615	)
Other comprehensive income (loss)	(19,105		)	(27		)				(19,132		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			44			44
Net current-period other comprehensive income (loss), net of taxes	(19,105		)	(27		)	44			(19,088		)
Balance at September 30, 2014	$	(18,116	)	$	(6	)	$	(2,581	)	$	(20,703	)

Other Comprehensive Income (Loss)

Details of other comprehensive income (loss) are as follows:

	Three Months Ended September 30,
	2014									2013
	Pre-Tax Amount			Tax Expense (Benefit)			Net Amount			Pre-Tax Amount		Tax Expense (Benefit)		Net Amount
Foreign currency translation adjustments	$	(19,105	)				$	(19,105	)	$	550	$	—	$	550
Postemployment benefits:
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	72			28			44			95		37		58
Unrealized gain (loss) on investment securities available for sale	(41		)	(14		)	(27		)	34		11		23
Other comprehensive income (loss)	$	(19,074	)	$	14		$	(19,088	)	$	679	$	48	$	631

Antidilutive Common Stock Equivalents

In the three month periods ended September 30, 2014 and 2013, respectively, stock options and stock appreciation rights related to 239 and 272 shares of common stock, were not included in the computation of diluted earnings per share for the periods then ended as they were anti-dilutive.

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Fair Value Measurements

3 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Marketable securities measured at fair value at September 30, 2014 and June 30, 2014 totaled $10,957 and $11,011, respectively. These marketable securities are held in a rabbi trust for a non-qualified deferred compensation plan. The marketable securities are included in Other Assets on the accompanying condensed consolidated balance sheets and their fair values are based upon quoted market prices in an active market (Level 1 in the fair value hierarchy).

The fair value of the uncommitted shelf facility agreement with Prudential Investment Management is $120,000 at September 30, 2014. (Level 2 in the fair value hierarchy)

The revolving credit facility and the term loan contain variable interest rates and their carrying values approximate fair value (Level 2 in the fair value hierarchy).

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Segment and Geographic Information (Tables)

3 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment financial information

Three Months Ended	Service Center Based Distribution		Fluid Power Businesses		Total
September 30, 2014
Net sales	$	575,097	$	127,228	$	702,325
Operating income for reportable segments	37,535		12,933		50,468
Assets used in business	1,251,565		217,354		1,468,919
Depreciation and amortization of property	3,843		368		4,211
Capital expenditures	2,738		362		3,100
September 30, 2013
Net sales	$	492,072	$	113,233	$	605,305
Operating income for reportable segments	28,372		9,457		37,829
Assets used in business	841,770		208,319		1,050,089
Depreciation and amortization of property	2,999		432		3,431
Capital expenditures	1,394		177		1,571

Enterprise Resource Planning system (ERP) related assets are included in assets used in business and capital expenditures within the Service Center Based Distribution segment.

Reconciliation of operating income for reportable segments to the consolidated income before income taxes

A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:

	Three Months Ended
	September 30,
	2014			2013
Operating income for reportable segments	$	50,468		$	37,829
Adjustment for:
Intangible amortization—Service Center Based Distribution	4,867			1,495
Intangible amortization—Fluid Power Businesses	1,624			1,754
Corporate and other (income) expense, net	(2,188		)	(4,959		)
Total operating income	46,165			39,539
Interest expense, net	1,662			61
Other (income) expense, net	244			(1,091		)
Income before income taxes	$	44,259		$	40,569

The change in corporate and other (income) expense, net is due to changes in the amounts and levels of expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support and other items.

Net sales are presented in geographic areas

Net sales are presented in geographic areas based on the location of the facility shipping the product and are as follows:

	Three Months Ended
	September 30,
	2014		2013
Geographic Areas:
United States	$	561,559	$	501,051
Canada	99,181		69,747
Other countries	41,585		34,507
Total	$	702,325	$	605,305

Other countries consist of Mexico, Australia and New Zealand

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Business Combinations Business Combination, Pro Forma Financial Information Table (Tables)

3 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Acquisition, Pro Forma Information [Table Text Block]

The following unaudited pro forma consolidated results of operations have been prepared as if the Reliance and Knox acquisitions (including the related acquisition costs) had occurred at the beginning of the first quarter of fiscal 2014:

Pro forma, three months ended September 30:	2013
Sales	$	663,010
Operating income	$	44,746
Net income	$	29,089
Diluted net income per share	$	0.68

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Other (Income) Expense, Net

3 Months Ended

Sep. 30, 2014

Other Income and Expenses [Abstract]

OTHER (INCOME) EXPENSE, NET

OTHER (INCOME) EXPENSE , NET

Other (income) expense, net consists of the following:

	Three Months Ended
	September 30,
	2014		2013
Unrealized (gain) loss on assets held in rabbi trust for a nonqualified deferred compensation plan	$	91	$	(596	)
Elimination of one-month Canadian reporting lag, effective July 1, 2013	—		(1,167		)
Foreign currency transactions (gain) loss	54		605
Other, net	99		67
Total other (income) expense, net	$	244	$	(1,091	)

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Benefit Plans

3 Months Ended

Sep. 30, 2014

Compensation and Retirement Disclosure [Abstract]

BENEFIT PLANS

BENEFIT PLANS

The following table provides summary disclosures of the net periodic postemployment costs recognized for the Company’s postemployment benefit plans:

	Pension Benefits						Retiree Health Care Benefits
Three Months Ended September 30,	2014			2013			2014			2013
Components of net periodic cost:
Service cost	$	24		$	19		$	13		$	12
Interest cost	224			295			24			35
Expected return on plan assets	(124		)	(104		)	—			—
Recognized net actuarial (gain) loss	140			153			(22		)	(9		)
Amortization of prior service cost	22			20			(68		)	(68		)
Net periodic cost	$	286		$	383		$	(53	)	$	(30	)

The Company contributed $5,832 to its pension benefit plans and $40 to its retiree health care plans in the three months ended September 30, 2014. Expected contributions for the remainder of fiscal 2015 are $570 for the pension benefit plans to fund scheduled retirement payments and $120 for retiree health care plans.

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Segment and Geographic Information

3 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

SEGMENT AND GEOGRAPHIC INFORMATION

The accounting policies of the Company’s reportable segments are generally the same as those used to prepare the condensed consolidated financial statements. Intercompany sales primarily from the Fluid Power Businesses segment to the Service Center Based Distribution segment of $5,573 and $5,533, in the three months ended September 30, 2014 and 2013, respectively, have been eliminated in the Segment Financial Information tables below.

Three Months Ended	Service Center Based Distribution		Fluid Power Businesses		Total
September 30, 2014
Net sales	$	575,097	$	127,228	$	702,325
Operating income for reportable segments	37,535		12,933		50,468
Assets used in business	1,251,565		217,354		1,468,919
Depreciation and amortization of property	3,843		368		4,211
Capital expenditures	2,738		362		3,100
September 30, 2013
Net sales	$	492,072	$	113,233	$	605,305
Operating income for reportable segments	28,372		9,457		37,829
Assets used in business	841,770		208,319		1,050,089
Depreciation and amortization of property	2,999		432		3,431
Capital expenditures	1,394		177		1,571

Enterprise Resource Planning system (ERP) related assets are included in assets used in business and capital expenditures within the Service Center Based Distribution segment.

A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:

	Three Months Ended
	September 30,
	2014			2013
Operating income for reportable segments	$	50,468		$	37,829
Adjustment for:
Intangible amortization—Service Center Based Distribution	4,867			1,495
Intangible amortization—Fluid Power Businesses	1,624			1,754
Corporate and other (income) expense, net	(2,188		)	(4,959		)
Total operating income	46,165			39,539
Interest expense, net	1,662			61
Other (income) expense, net	244			(1,091		)
Income before income taxes	$	44,259		$	40,569

The change in corporate and other (income) expense, net is due to changes in the amounts and levels of expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support and other items.

Net sales are presented in geographic areas based on the location of the facility shipping the product and are as follows:

	Three Months Ended
	September 30,
	2014		2013
Geographic Areas:
United States	$	561,559	$	501,051
Canada	99,181		69,747
Other countries	41,585		34,507
Total	$	702,325	$	605,305

Other countries consist of Mexico, Australia and New Zealand.

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Subsequent Events (Notes)

3 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

SUBSEQUENT EVENTS

We have evaluated subsequent events and transactions subsequent to September 30, 2014, through the date the financial statements were issued.

On November 3, 2014, the Company acquired substantially all of the net assets of Ira Pump and Supply Inc. (Ira Pump), headquartered in Ira, Texas. The acquisition of Ira Pump further expands the Company's capabilities to serve the upstream oil and gas industry in the United States. As a distributor of oilfield pumps and supplies, this business will be included in the Service Center Based Distribution Segment. The financial results of the operations acquired will be included in the Company's results of operations from November 3, 2014.

On October 30, 2014, the Company amended and increased its unsecured shelf facility with Prudential Investment Management to provide an available borrowing capacity of $100,000. The Company borrowed $50,000 to fund the acquisition as well as working capital needs. These "Series D" borrowings carry a fixed interest rate of 3.21%, with equal principal payments due in October of 2019 and 2023, leaving a remaining borrowing capacity on the unsecured shelf facility of $50,000.

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Fair Value Measurements (Details) (Recurring [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Level 1 [Member]
Fair Value Measurements (Textuals) [Line Items]
Marketable securities	$ 10,957	$ 11,011
Prudential Facility [Domain] | Fair Value, Inputs, Level 2 [Member]
Fair Value Measurements (Textuals) [Line Items]
Debt Instrument, Fair Value Disclosure	$ 120,000

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Shareholders' Equity (Tables)

3 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

Accumulated Other Comprehensive Income (Loss)

Changes in the accumulated other comprehensive income (loss), are comprised of the following:

	Three Months Ended September 30, 2014
	Foreign currency translation adjustment			Unrealized gain (loss) on securities available for sale			Postemployment benefits			Total Accumulated other comprehensive income (loss)
Balance at July 1, 2014	$	989		$	21		$	(2,625	)	$	(1,615	)
Other comprehensive income (loss)	(19,105		)	(27		)				(19,132		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			44			44
Net current-period other comprehensive income (loss), net of taxes	(19,105		)	(27		)	44			(19,088		)
Balance at September 30, 2014	$	(18,116	)	$	(6	)	$	(2,581	)	$	(20,703	)

Schedule of Comprehensive Income (Loss) [Table Text Block]

Details of other comprehensive income (loss) are as follows:

	Three Months Ended September 30,
	2014									2013
	Pre-Tax Amount			Tax Expense (Benefit)			Net Amount			Pre-Tax Amount		Tax Expense (Benefit)		Net Amount
Foreign currency translation adjustments	$	(19,105	)				$	(19,105	)	$	550	$	—	$	550
Postemployment benefits:
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs	72			28			44			95		37		58
Unrealized gain (loss) on investment securities available for sale	(41		)	(14		)	(27		)	34		11		23
Other comprehensive income (loss)	$	(19,074	)	$	14		$	(19,088	)	$	679	$	48	$	631

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Business Combinations Business Combinations Textuals (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended
	Sep. 30, 2014 Knox Acquisition [Member]	Jul. 01, 2014 Knox Acquisition [Member]	Sep. 30, 2014 Rodensa & GSB Acquisition [Member]	Jul. 01, 2014 Rodensa & GSB Acquisition [Member]	Jun. 30, 2014 Reliance Acquisition [Member]	May 01, 2014 Reliance Acquisition [Member]	Dec. 31, 2013 Tops Acquisition [Member]	Jul. 01, 2014 Tops Acquisition [Member]	Sep. 30, 2014 Prudential Facility [Member]	Jul. 01, 2014 Prudential Facility [Member]
Business Acquisition, Percentage of Voting Interests Acquired		100.00%				100.00%
Total Consideration	$ 132,000		$ 12,600		$ 179,800		$ 17,000
Cash Paid at Closing		118,000
Long-term Debt									120,000	120,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate										3.19%
Funding from Holdback Payments		14,000		1,600		20,000		2,550
Debt Instrument, Interest Rate During Period	1.50%				2.00%
Total assets acquired		171,600		10,400		27,500		3,900
Goodwill plus Intangibles Acquired				2,200		152,300		13,100
Funding from Canadian Cash						31,900
Funding From Existing Credit Facility						36,600
Funding from New Credit Facility						$ 100,000

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Segment and Geographic Information (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	$ 46,165	$ 39,539
Adjustment for:
Intangible amortization	6,491	3,249
Corporate and other expense (income), net	(2,188)	(4,959)
Interest (Income) Expense, net	1,662	61
Other (Income) Expense, net	244	(1,091)
Income before income taxes	44,259	40,569
Operating Segments [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	50,468	37,829
Service Center Based Distribution [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	37,535	28,372
Adjustment for:
Intangible amortization	4,867	1,495
Fluid Power Businesses [Member]
Reconciliation of operating income for reportable segments to the consolidated income before income taxes
Total operating income	12,933	9,457
Adjustment for:
Intangible amortization	$ 1,624	$ 1,754

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Current Assets:
Accounts Receivable, less allowances	$ 10,513	$ 10,385
Noncurrent Assets:
Property, less accumulated depreciation	$ 160,063	$ 156,872
Shareholders’ Equity
Preferred stock, par value	$ 0.00	$ 0.00
Preferred stock, shares authorized	2,500,000	2,500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.00	$ 0.00
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	54,213,000	54,213,000
Treasury shares	12,825,000	12,650,000

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Debt (Notes)

3 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

DEBT

Revolving Credit Facility

The Company has a revolving credit facility with a group of banks expiring in May 2017. This agreement provides for unsecured borrowings of up to $150,000. Fees on this facility range from 0.09% to 0.175% per year based upon the Company's leverage ratio at each quarter end. Borrowings under this agreement carry variable interest rates tied to either LIBOR, prime, or the bank’s cost of funds at the Company’s discretion. This agreement also enables the Company to refinance this debt on a long-term basis. At September 30, 2014 and June 30, 2014, the Company had $103,000 and $69,000 outstanding under this credit facility, respectively. Unused lines under this facility, net of outstanding letters of credit of $8,900 and $8,700 to secure certain insurance obligations, totaled $38,100 and $72,300 at September 30, 2014 and June 30, 2014, respectively and are available to fund future acquisitions or other capital and operating requirements. The weighted average interest rate on the revolving credit facility outstanding as of September 30, 2014 and June 30, 2014 was 0.85%.

Long-Term Borrowings

The Company entered into a $100,000 unsecured five-year term loan with a group of banks in April2014, with a final maturity date in April2019. Borrowings under this agreement carry a variable interest rate tied to LIBOR, which at September 30, 2014 and June 30, 2014 was a rate of 1.06%. The term loan had $98,800 and $99,400 outstanding at September 30, 2014 and June 30, 2014, respectively.

In April 2014 the Company assumed $2,400 of debt as a part of the headquarters facility acquisition. The 1.5% fixed interest rate note is held by the State of Ohio Development Services Agency, maturing in May 2024. At September 30, 2014 and June 30, 2014, $2,300 was outstanding.

At September 30, 2014, the Company had borrowings outstanding under its uncommitted unsecured shelf facility agreement with Prudential Investment Management of $120,000. These "Series C" borrowings carry a fixed interest rate of 3.19%, which is due in equal principal payments in July of 2020, 2021 and 2022. As of September 30, 2014, $5,000 in additional financing was available under this facility.

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Business Combinations Knox - Fair Value of Assets Acquired (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2014 Knox Acquisition [Member]	Jul. 01, 2014 Knox Acquisition [Member]
Accounts receivable				$ 20,100
Inventories				18,900
Property				3,600
Identifiable intangible assets				58,500
Goodwill	259,156	193,494		70,500
Total assets acquired				171,600
Accounts payable and accrued liabilities				10,300
Deferred income taxes				29,300
Net assets acquired				132,000
Purchase price			132,800
Working Capital Adjustments			(800)
Total Consideration			$ 132,000

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Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Pension Benefits [Member]
Components of net periodic cost:
Service cost	$ 24	$ 19
Interest cost	224	295
Expected return on plan assets	(124)	(104)
Recognized net actuarial (gain) loss	140	153
Amortization of prior service cost	22	20
Net periodic cost	286	383
Retiree Health Care Benefits [Member]
Components of net periodic cost:
Service cost	13	12
Interest cost	24	35
Expected return on plan assets	0	0
Recognized net actuarial (gain) loss	(22)	(9)
Amortization of prior service cost	(68)	(68)
Net periodic cost	$ (53)	$ (30)

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Goodwill and Intangibles (Tables)

3 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill by reportable segment

The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Fluid Power Businesses segment for the three month period ended September 30, 2014 are as follows:

	Service Centers			Fluid Power		Total
Balance at July 1, 2014	$	192,565		$	929	$	193,494
Goodwill acquired during the period	71,361			—		71,361
Other, primarily currency translation	(5,699		)	—		(5,699		)
Balance at September 30, 2014	$	258,227		$	929	$	259,156

At September 30, 2014, accumulated goodwill impairment losses, subsequent to fiscal year 2002, totaled $36,605 and related to the Fluid Power Businesses segment.

Schedule of Intangible Assets

The Company’s identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:

September 30, 2014	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	217,668	$	52,751	$	164,917
Trade names	43,316		11,153		32,163
Vendor relationships	15,144		6,793		8,351
Non-competition agreements	4,528		1,462		3,066
Total Identifiable Intangibles	$	280,656	$	72,159	$	208,497

June 30, 2014	Amount		Accumulated Amortization		Net Book Value
Finite-Lived Identifiable Intangibles:
Customer relationships	$	170,395	$	48,285	$	122,110
Trade names	36,912		10,394		26,518
Vendor relationships	15,446		6,628		8,818
Non-competition agreements	3,322		1,260		2,062
Total Identifiable Intangibles	$	226,075	$	66,567	$	159,508

Amounts include the impact of foreign currency translation. Fully amortized amounts are written off.

Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block]

During the three month period ended September 30, 2014, the Company acquired identifiable intangible assets with a preliminary acquisition cost allocation and weighted-average life as follows:

	Acquisition Cost Allocation		Weighted-Average Life
Customer relationships	$	51,494	20
Trade names	6,928		5
Vendor relationships	9		5
Non-competition agreements	1,300		5
Total Intangibles Acquired	$	59,731	18